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Architectural Billing Continues Positive Outlook, But '08 Construction Forecast is Tempered

Latest News > Industry News

After a fall rebound from a summer slowdown, the Architecture Billings Index (ABI) of the American Institute of Architects (AIA) recorded another healthy score in December, for the 34th month in a row.

The December ABI rating was 55.4, up a fraction from the 55.3 mark in November and inquiries for new projects was 58.1. Any score above 50 indicates an increase in billings among respondents. The ABI is considered a leading indicator of construction activity approximately nine to 12 months in the future.

The stretch of 34 straight months with a positive score is the longest run in the history of the survey that began in 1995, eclipsing the positive scores that continued from April 1998 to December 2000.

Regionally, the Northeast showed the greatest strength with an index score of 63.6. The South recorded 57.1, with the Midwest (51.5) and the West (51.3) trailing somewhat.

The commercial/industrial sector led with an index score of 62.1, followed by mixed practice (58.7), institutional (53.8) and multi-family residential (46.2).

However, the AIA semi-annual Consensus Construction Forecast, a survey of the nation's leading construction forecasters, indicated that the nonresidential construction market is expected to increase by a modest 0.7% this year in inflation-adjusted terms.

"After ending 2007 on a high note, we are anticipating significant slowing of nonresidential construction growth in 2008," said Kermit Baker, AIA chief economist, "A slight decrease in activity is actually expected in 2009, with 2008 and 2009 projected to be the trough in the current construction cycle."

The hotel, health care and education sectors all are expected to show growth in excess of 5% this year, according to the survey. The industrial (-3.8%) and retail (-5.7) segments are both expected to decline.

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