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April 7, 2008: Index Points to Downturn in Commercial Construction

April 7, 2008
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WASHINGTON - Reflecting the deteriorating conditions in the housing market and overall economy, the Architecture Billings Index (ABI) tumbled almost nine points in February. As a leading economic indicator of construction activity, the ABI shows an approximate nine to 12 month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the February ABI rating fell to 41.8, its lowest level since October 2001, and down significantly from the 50.7 mark in January (any score above 50 indicates an increase in billings). The inquiries for new projects score was 54.3.

“This is a clear indication that there could be tougher times ahead for design firms and a noticeable slowdown in commercial construction projects coming online in the foreseeable future,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Interestingly enough, we have also had some survey members reporting that their business is in great shape from a billings and demand standpoint. The one bright spot continues to be the institutional sector with continued positive conditions for construction projects such as schools, hospitals, and government buildings.”

The sector breakdown was: institutional 54.9, multifamily residential 46.6, mixed practice 43.9, and commercial/industrial 40.6. The regional averages were: Northeast 51.5, South 48.3, West 46.3, and Midwest 42.6.

The Architecture Billings Index is derived from a monthly “work-on-the-boards” survey and produced by the AIA Economics & Market Research Group. For more information, visit www.aia.org.

Publication date: 04/07/2008

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