Tag archives for: Architecture billings index
Demand for architectural design fell in April to the lowest point of the year.
The Architecture Billings Index, which indicates construction volume, decreased marginally to 47.6 in April from 50.5 in March, according to American Institute of Architects data released Wednesday.
The benchmark for the index is 50. Anything above that indicates an increase in architectural billings and anything below indicates a decrease. The AIA surveys a panel of member firms monthly, asking if billings increased, decreased, or stayed the same. The national association then weighs the responses for the index.
April was the first month in 2011 the index swung below 50.
The sharp decline in demand for architectural services has analysts scratching their heads. Kermit Baker, chief economist at AIA, said he is unsure whether to attribute the drop to an industry-wide reversal in demand for design or a bump in the road.
“The fact that most construction projects funded under the federal stimulus program have completed their design work, the anxiety around the possibility of a shutdown in the federal government in April, as well as the unusually severe weather in the Southeast had something to do with this falloff,” Baker said. “However, the majority of firms are reporting at least one stalled project in-house because of the continued difficulty in obtaining financing.”
Baker also echoed Redwood Trust CEO Martin Hughes’ sentiment when he said financing continues to be the main roadblock to recovery. Hughes testified before the Senate Banking Committee Wednesday.
The new projects inquiry index also experienced a sharp drop in April, falling to 55 from 58.7 a month prior, according to AIA.
The regional buildings index was highest in the Northeast at 51.2, followed by the Midwest at 51.1, the South at 48.3, and the West at 47.7. The index was the highest in the multifamily residential sector (53.9) followed by the commercial/industrial sector (49.9), the institutional sector (45.9) and the mixed practice sector (45.2).
Signs of recovery – but some practices just hanging on
Work for architects in the US stayed close to break-even level during the first quarter of this year.
The American Institute of Architects reported that the score for its Architecture Billings Index was 50.5 for March – down slightly on the 50.6 recorded the previous month. Any mark above 50 reflects an increase in billings. The new projects inquiry index was 58.7, up from February’s figure of 56.4.
AIA chief economist Kermit Baker said: “Currently, architecture firms are essentially caught swimming upstream in a situation where demand is not falling back into negative territory but also not exhibiting the same pace of increases seen at the end of 2010.
“The range of conditions reported continues to span a very wide spectrum with some firms reporting an improving business environment and even ramping up staffing, while others continue to operate in survival mode. The catalyst for a more robust recovery is likely financing.”
Article via Building Design Mag
* January ABI 50.0, down 3.9 pts
* New projects index falls 5 pts to 56.5
* Cautious optimism for design industry: AIA
NEW YORK, Feb 23 (Reuters) – A leading indicator of U.S. nonresidential construction activity weakened last month after two months of improving numbers, an architects’ trade group said on Wednesday.
The monthly Architecture Billings Index fell almost 4 points in January to 50.0, a level that indicates neither expansion nor contraction of demand for design services, the American Institute of Architects said.
The billings index is considered a predictor of construction spending about nine to 12 months in the future, since buildings are designed long before they are erected. The latest readings suggest an anticipated recovery in U.S. nonresidential construction may not gain traction this year.
A separate index of inquiries for new projects fell more than five points to 56.5, according to the AIA.
“This slowdown is indicative of what is likely to be a very gradual improvement in business conditions at architecture firms for the better part of this year,” said AIA chief economist Kermit Baker. “We’ve been taking a cautiously optimistic approach for the last several months and there is no reason at this point to change that outlook.”
The AIA’s billings index dropped below 50 in January 2008, indicating falling demand, and stayed below that mark until last November. The separate inquiries index only fell below 50 briefly in 2008. It is typically higher than the billings index, as prospective customers solicit bids from multiple architecture firms.
Most diversified industrial companies get at least some revenue from nonresidential construction, selling machinery used for erecting buildings or components such as elevators or electrical and cooling systems.
Our company began to experienc a slight uptick in hiring during May to present. This article by Prashant Gopal in Bloomberg Business seems to confirm what we are reporting:
May 19 (Bloomberg) — A leading indicator for U.S. commercial property construction showed signs of improvement in April, indicating a rebound in building may be near, the American Institute of Architects said.
The Architecture Billings Index climbed to 48.5 from 46.1 in March, the third straight monthly increase, the Washington- based group said today. While any score of less than 50 indicates a drop in demand from the previous month, April’s decline was the smallest since January 2008.
“It appears that the design and construction industry may be nearing an actual recovery phase,” Kermit Baker, the group’s chief economist, said in a statement. “The economic landscape is improving.”
The index is an indicator of future building of offices, warehouses, apartments and retail properties. There is typically a lag of about nine to 12 months between the time architects bill clients and when developers start spending on construction, according to the AIA.
Overall construction spending in the U.S. increased 0.2 percent in March, fueled by federal stimulus spending on power plants, hospitals and transportation projects, the Commerce Department said May 3. Private construction spending for non- residential projects fell 0.7 percent in March from the previous month and 26 percent from a year earlier.
Commercial Property Values
The Moody’s/REAL Commercial Property Price Index fell 0.5 percent from February, the second straight monthly decline, Moody’s said today in a report. Prices slid 25 percent from a year earlier and are down 42 percent from the peak reached in October 2007.
RNL, a Denver-based company that provides architectural work for mixed-use projects in the western U.S. and overseas, has added five employees over the past three months. It trimmed its workforce to about 150 from 250 during the past two years, said Richard von Luhrte, the firm’s president.
Foreign investors, public-private partnerships and landlords seeking to renovate distressed properties are driving von Luhrte’s business, he said in an interview.
“We’ve seen the bottom and we’re stable,” he said. “Obviously the last year has been challenging, but there are some opportunities out there.”
The Northeast was the strongest of the four regions measured by the American Institute of Architects index, registering 51 and showing growth in demand for commercial architects. It was followed by the Midwest at 49.2, the South at 46.5, and the West at 44.7.
The Architecture Billings Index is based on a survey of firms owned by AIA members. Participants are asked each month whether their billings increased, decreased or stayed the same.
aia, architect, architects, architecture, architecture jobs, Hiring trends, jobs, recession, unemployed architects
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American Institute of Architects, Architecture billings index, Bloomberg, Commercial Property Values, Kermit Baker, Moody’s/REAL Commercial Property Price Index, Prashant Gopal
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