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Architecture Billing Index Tumbles to Two-Year Low

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Following a decline in April, the American Institute of Architects (AIA) Architecture Billings Index (ABI) fell 2.6 points, to 45.8, in May, its lowest reading since February 2010.

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The index rose five consecutive months before dropping in April, an occurence reminiscent of last year's strong spring building season and subsequent slide in the early summer.

“For the second year in a row, we’re seeing declines in springtime design activity after a healthy first quarter,” says AIA Chief Economist, Kermit Baker. “Given the ongoing uncertainly in the economic outlook, particularly the weak job-growth numbers in recent months, this should be an alarm bell going off for the design and construction industry.”

The Northeast (48.6) posted the highest billings index average among four regions, followed by the West (47.6), Midwest (46.8),  and South (46.1). Activity was strongest in the commercial/industrial (50.7) and multi-family residential (48.9) sectors and substantially weaker in the institutional (45.6), mixed-practice (41.5) sectors.

“The commercial/industrial sector is the only one recording gains in design activity at present, and even this sector has slowed significantly,” says Baker. “Construction forecasters will have to reassess what conditions will look like moving forward.”

A leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending, with any score above 50 indicating an increase in billings).

A separate ABI measure, project inquiries, slipped from 54.4 to 54 in May, marking its third consecutive monthly decline and its lowest reading in a year.

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