Business Conditions Slowly Improving Washington, D.C. — May 19, 2010 — For the third straight month the Architecture Billings Index (ABI) has gone up. As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the April ABI rating was 48.4, up from a reading of 46.1 the previous month. Although this score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), it is the highest score since January 2008 … Read more

The small March increase was due to a pickup in institutional spending, probably stimulus plan funded, offset by continuing declines in developer financed projects. The stimulus building construction will be more than offset this year by declining state and municipal budgets for schools and public buildings. Expect nonresidential construction spending to slip slightly lower into the fall. The largest risk of decline is for municipal spending, now being cut quickly after a plunge in property tax receipts. March construction spending increased for healthcare, religious buildings and public safety facilities. None of these gains are likely sustainable during midyear. Most of … Read more

Analysis of New April Producer Price Index Shows Increasing Pressure on Contractors to Raise Prices to Survive, Construction Economist Notes Construction contractors continue to be squeezed between rising materials costs and falling output prices according to a new analysis of materials costs conducted by the Associated General Contractors of America. The association noted that even as the producer price index leapt in April for key construction components, the amount contractors charge for construction services remains depressed. “Paying more to earn less is not a sustainable business model,” said Ken Simonson, chief economist for the Associated General Contractors of America. “Contractors … Read more