The American Institute of Architects reports that the Architecture Billings Index (ABI) was positive again in February 2006. The ABI has been positive for 17 consecutive months and 26 out of the last 27 months, after seasonal adjustments. This is the longest stretch that the index has been positive since April 1998 through December 2000. The AIA reported the February 2006 ABI rating was 55.5 (any score above 50 indicates an increase), the same score that was registered in January.
“The fact that we are seeing consistently strong numbers at architecture firms over such a prolonged period without any dips is especially encouraging for the nonresidential construction outlook,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “These figures are following along a similar path as the conditions that led to a very healthy construction sector in the late 1990’s.”
This positive news for the nonresidential construction industry comes on the heels of the index of U.S. homebuilder sentiment falling to its lowest level in three years in March, with rising interest rates and weakening demand for new homes cited as the reasons for the drop. The AIA expects that nonresidential construction can offset some of the emerging weakness in the residential market. Existing US home sales fell for the fifth straight month in January
The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the AIA says the findings amount to a leading economic indicator that provides an approximately six month glimpse into the future of nonresidential construction activity. The diffusion indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month.
--RSN