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Architecture Billings Index Unveiled as a Predictive Indicator of Future Construction Activity
Results Indicate Modest Increases in Business, Confidence in Growing Economy, Concerns Over Inflation
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For Immediate Release |
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Washington, D.C., October 19,
2005 — The American Institute of Architects (AIA) officially introduced
the Architecture Billings Index (ABI), which is determined based on
the results of a monthly “Work-on-the-Boards” survey of
U.S. architecture firms. The survey has been taking place since
1995 and the results have been shared with AIA members and
academics, and will now be made widely available in the third week
of every month to media covering economic conditions.
Accounting for eight percent of Gross Domestic Product,
construction activity typically follows billings for architectural
services by approximately six months. A white paper titled,
“Business Activity at U.S. Architecture Firms as a Leading
Indicator for the Construction Industry” will be published in
the October 2005 issue of Business Economics, the journal of the
National Association of Business Economics, and can be accessed
through this link, http://www.aia.org/SiteObjects/files/Bus_Econ_ABI_paper.pdf
Billings at architecture firms in September made their largest
monthly gain since 1998, generating a score of 60.5 on the ABI (any
score above 50 indicates an increase in billings at architecture
firms), following a score of 55.9 in August. Recent increases in
design activity expect to translate into similar increases in
construction activity in early 2006. Inquiries for new design
projects scored 62.5, indicating more expected future growth in
design activity, however the pace for project inquires in September
slowed somewhat compared to July and August levels.
Highlights from the September ABI:
• Architecture firms in all regions reported improvement in
business conditions, with firms in the South reporting the
strongest improvement
• Increases in selected construction commodities and problems
with availability of building materials has caused inflation to
become a key concern
• Construction outlook for 2006 positive based on favorable
economic conditions (low interest rates, moderate overall
inflation)
“The findings in the Architecture Billings Index should be
encouraging for the nonresidential construction industry, and those
business sectors affected by it,” said AIA Chief Economist
Kermit Baker, PhD, Hon. AIA. “The positive outlook should be
tempered, however, because of the effect that rising energy prices,
increased costs for building materials, and the possibility of
rising interest rates will have on the overall economy in the
months to come.”
About the AIA Architecture Billings Index
The Architecture Billings Index is derived from a monthly
“Work-on-the-Boards” survey and produced by the AIA
Economics & Market Research Group. The findings amount to a
leading economic indicator that provides an approximately six month
glimpse into the future of nonresidential construction activity.
The 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.
About The American Institute of Architects
For almost 150 years, members of The American Institute of
Architects have worked with each other and their communities to
create more valuable, healthy, secure, and sustainable buildings
and cityscapes. AIA members have access to the right people,
knowledge, and tools to create better design, and through such
resources and access, they help clients and communities make their
visions real. www.aia.org
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