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June Architectural Billings Point to Dwindling Demand

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Although demand for U.S. design services was unchanged in June, it remained well below levels required to fuel growth in non-residential construction, according to American Institute of Architects (AIA) Architectural Billing Index.

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June's ABI score was 45.9, nearly identical to May's mark of 45.8, suggesting U.S. construction has hit another trough, given that  scores below 50 denote a decline in demand. Demand was strongest in the Midwest (48.0), followed by the South (47.6), Northeast (46.4) and West (44.3).

Among market sectors, multi-family residential (49) scored highest, followed by commercial/industrial (46.9), institutional (46.0) and mixed practice (45.9)

June marked the third consecutive month the ABI failed to exceed 50. The index rose five consecutive months before plummeting in April, a reversal reminiscent of last year's strong spring building season and subsequent slide in early summer.

As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architectural billings and construction spending.

“The downturn in design activity that began in April and accelerated in May has continued in June, likely extending the weak market conditions we've seen in non-residential building activity,” says AIA Chief Economist Kermit Baker. “While not all firms are experiencing negative conditions, a large share is still coping with a sluggish and erratic marketplace.”

The story is much the same in the Midwest. In Indianapolis, year-over-year construction job growth is outpacing nearly every metro market in the nation, according to Arlington, Va.-based Associated General Contractors of America (AGC). Chicago, by comparison, is shedding up to 5,900 jobs per month, among the nation's worst losses.

In Ohio, construction employment grew year-over-year in the first five months of 2012, and in 17 out of the last 18 months, according to AGC. Activity is particularly strong in the energy, health care and industrial sectors.


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