Architecture Billings Index Reverts into Negative Territory

WASHINGTON, D.C. — After indicating increasing demand for design services for the better part of a year, the Architecture Billings Index has reversed course in April.   As a leading economic indicator of construction activity, the ABI reflects the approximate from nine- to twelve-month lag time between architecture billings and construction spending.   The American Institute of Architects reported the April ABI score was 48.6, down from a mark of 51.9 in March.   This score reflects a decrease in demand for design services (any score above 50 indicates an increase in billings) and is the lowest mark since July 2012.   The new projects inquiry index was 58.5, down from the reading of 60.1 the previous month.

“Project approval delays are having an adverse effect on the design and construction industry, but again and again we are hearing that it is extremely difficult to obtain financing to move forward on real estate projects,” said AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.   “There are other challenges that have prevented a broader recovery that we will examine in the coming months if this negative trajectory continues. However, given that inquiries for new projects continue to be strong, we"re hopeful that this is just a short-term dip.”

Key April ABI highlights:

• Regional averages: South (52.6),   West (50.7), Midwest (49.4), Northeast (48.2)
• Sector index breakdown: multi-family residential (52.0), institutional (50.1), commercial / industrial (49.2),   mixed practice (48.6)
• Project inquiries index: 58.5

The regional and sector categories are calculated as a 3-month moving average, whereas the index and inquiries are monthly numbers.