Despite concern over rising construction costs and the limited availability of building materials, billings at U.S. architecture firms were positive for the 19th consecutive month in April, according to new seasonally adjusted figures from the American Institute of Architects.
The Architecture Billings Index, a leading economic indicator of nonresidential construction activity, had an April rating of 54.2 (any score above 50 indicates an increase), up significantly from the 50.5 mark in March.
“The protracted period of positive billings at architecture firms is more positive news for the nonresidential construction industry that should amount to sustained activity well into 2007,” said AIA Chief Economist Kermit Baker. “The increasing costs and decreasing availability of building materials continues to be a difficult issue, however, and was noted as a problem by more than 70 percent of surveyed architecture firms.”
By region, the Northeast continued to lead the nation with an average ABI rating of 53.9, followed by the South and West (both 52.8), and the Midwest (50.4.)
“The latest news on architecture billings provides an important confirmation that the strong first-quarter figures for business investment in structures (up an annualized 8.6 percent) was not just a one-time spurt,” said AMG National Trust Bank Chief Economist Michael Bergmann. “No doubt some of the first-quarter pick-up was due to a bounce back from the weather-related difficulties that prevailed from the Gulf Coast to the Northeast during the latter part of 2005. That is clearly not the whole story, however. Declines in industrial and office vacancies were significant over the past year. As the ABI illustrates, the need for additional capacity has businesses’ planning for new construction, even as needed repairs to storm-related damage assumes less importance. Nonresidential construction should remain robust through the remainder of the year with annual growth rates ranging from 8 percent to 11 percent in the next three quarters.”
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.