2006 Poised to be the Best Year for Nonresidential Construction Since 2000
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Architecture Billings Index Continues Growth for Eleventh Straight Month
The Architecture Billings Index (ABI), a leading economic indicator of nonresidential construction activity, showed growth for the eleventh consecutive month in November, according to the monthly report from The American Institute of Architects (AIA). Due to the approximately six month lag time between billings for architectural services and construction activity, nonresidential construction activity is expected to be a strong economic sector in much of 2006.
“It is especially noteworthy that if architecture firms report even modest billings gains in December, 2005 will be the first year since 2000 that that gains were reported every month of the year,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. “We are expecting improved business conditions for construction firms that specialize in commercial/industrial, as well as institutional projects.”
The November ABI rating of 58.4 (any score above 50 indicates an increase) represents slightly higher growth than the 57.5 score in October (November 2004 ABI was 51.6, November 2003 ABI was 48.5).
Visit the web at http://www.aia.org/aiarchitect/thisweek05/ tw1216/tw1216otb.cfm for the full report.
CIBC World Markets Industrial Multi-Industry Senior Analyst, Robert McCarthy, stated, “We are very encouraged by the continued strong readings indicated by the AIA billings index. We believe that many electrical equipment suppliers, particularly electrical product and lighting fixture manufacturers, will be prime beneficiaries of this likely pick up in nonresidential construction activity.”
Highlights from November ABI:
- Continued improvement in business conditions for U.S. architecture firms in the Northeast and Midwest
- Firms in the South and West exhibit stable growth levels
- With a score of 66, inquiries for new projects increased to the highest growth rate of the year indicating possible momentum for continued growth into 2006
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. 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 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 memberowned 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, and sustainable buildings and cityscapes. Visit
www.aia.org for more information.
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