May Registers Substantial Drop in Architecture Billings Index

Following April's first negative reading in five months, the Architecture Billings Index (ABI) dropped significantly again in May.

The ABI is considered a leading indicator of construction activity, reflecting the approximate nine- to twelve-month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the May ABI score was 45.8, following a mark of 48.4 in April. The score reflects a sharp decrease in demand for design services (any score above 50 indicates an increase in billings).

The new projects inquiry index was 54.0, down slightly from mark of 54.4 the previous month.

“For the second year in a row, we’re seeing declines in springtime design activity after a healthy first quarter. Given the ongoing uncertainly in the economic outlook, particularly the weak job growth numbers in recent months, this should be an alarm bell going off for the design and construction industry,” said AIA Chief Economist Kermit Baker. “The commercial/industrial sector is the only one recording gains in design activity at present, and even this sector has slowed significantly. Construction forecasters will have to reassess what conditions will look like moving forward.”

May ABI highlights:

  • Regional averages: Northeast (48.6), West (47.6), Midwest (46.8), South (46.1)
  • Sector index breakdown: commercial / industrial (50.7), multi-family residential (48.9), institutional (45.6), mixed practice (41.5)
  • Project inquiries index: 54.0

Regional and sector categories are calculated as 3-month moving averages, whereas the index and inquiries are monthly numbers.

The Architecture Billings Index (ABI), produced by the AIA Economics & Market Research Group, is a leading economic indicator that provides an approximately nine to twelve month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member-owned firms.

Loading