The First Facility Management Blog

Business conditions at architecture firms continue to deteriorate, with the Architecture Billings Index (ABI) posting its lowest level since the survey began in 1995 for the second month in a row. 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 November ABI rating was 34.7, down from the 36.2 mark in October (any score above 50 indicates an increase in billings). The inquiries for new projects score was 38.3, also a historic low point.

“With mounting job losses, declines in retail sales, and travel cut-backs, the need for new commercial facilities has dropped considerably recently,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “What’s just as troubling is that the institutional sector–schools, hospitals, and public buildings–is also beginning to react to tighter credit conditions and a weakening economy.”

Key November ABI highlights:
Regional averages: Northeast (39.5), South (36.8), West (33.5), Midwest (31.4)
Sector index breakdown: mixed practice (44.5), institutional (40.8), multi-family residential (30.0), commercial / industrial (26.7)
Project inquiries index: 38.3

Following three consecutive months of signs of greater stability in design activity, the Architecture Billings Index (ABI) fell precipitously, dropping more than six points. 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 September ABI rating was 41.4, down sharply from the 47.6 mark in August (any score above 50 indicates an increase in billings). The inquiries for new projects score was 51.0. This is also the first time in 2008 that the institutional sector has fallen below the 50 mark.

“With all of the anxiety and uncertainty in the credit market, the conditions are likely to get worse before they get better,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “Many architects are reporting that clients are delaying or canceling projects as a result of problems with project financing.”

Key September ABI highlights:
Regional averages: Midwest (45.2), West (45.0), Northeast (44.2), South (44.1)
Sector index breakdown: mixed practice (45.9), institutional (45.6), commercial / industrial (42.1), multi-family residential (40.3)
Project inquiries index: 51.0