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Sept. 29, 2008: Unfavorable Conditions Seen for Nonresidential Construction

September 29, 2008
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WASHINGTON - While conditions have improved somewhat for three consecutive months, the American Institute of Architects (AIA) says its Architecture Billings Index (ABI) continues to point to unfavorable conditions for the nonresidential construction market.

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 AIA reported that the August ABI rating was 47.6, up slightly from the 46.8 mark in July (any score above 50 indicates an increase in billings). The inquiries for new projects score was 52.4. There is, however, continued demand for projects such as schools, hospitals, and government buildings, with the institutional category of the ABI remaining positive going all the way back to 2004.

“The recent figures over the last quarter are no real surprise given the overall state of the economy,” said AIA Chief Economist Kermit Baker, Ph.D., Hon. AIA. “The news for industries affected by the construction industry is that looking back 12 to 18 months, the numbers were extremely healthy. That means many of those projects are currently in or entering the construction phase so there should still be demand for labor and building materials, and later on interiors, computer equipment, and the like.”

August ABI regional averages were: Midwest - 49.4, West - 49.2, Northeast - 45.2, and South - 45. The sector index breakdown was: institutional - 52.2, commercial/industrial - 47.5, mixed practice - 44.8, and multifamily residential - 40.8.

For more information, visit www.aia.org.

Publication date: 09/29/2008

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