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Around the Industry - Dec 21, 2012
AIA Billings Index tumbles almost three points in April. Following several months of relatively positive business conditions, the Architecture Billings Index (ABI) fell almost three points in April. As a leading economic indicator of construction activity, the ABI reflects the approximate nine-to-twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA), Washington, D.C., reported the April ABI score was 47.6 points, a decrease from a reading of 50.5 points the previous month. This score reflects a sharp decrease in demand for design services (any score above 50 points indicates an increase in billings). The new projects inquiry index was 55 points, down from a mark of 58.7 points in March, but still at a healthy level.
“The first question is whether this drop is a sign of an industry-wide reversal in demand for design services or a bump in the road,” said AIA Chief Economist Kermit Baker. “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. However, the majority of firms are reporting at least one stalled project in-house because of the continued difficulty in obtaining financing. That issue continues to be the main roadblock to recovery.”
PMI slips to 60.4 points. Norbert Ore, chair of ISM’s Manufacturing Business Survey Committee said, “The New Orders and Production Indexes continue to drive the PMI, as they have both exceeded 60 percent for five consecutive months. Manufacturing employment appears to have developed significant momentum, as the Employment Index readings for the first four months of 2011 are the highest readings in the last 38 years. Inventory growth also took place in April after two months of destocking; however, the inventory restocking would appear to be necessitated by the strong performance in new orders.”
Leading economic indicators still strong. The Conference Board Leading Economic Index (LEI) for the U.S. rose 0.4 percent in March to 114.1 (2004 = 100), following a one-percent increase in February, and a 0.2 percent increase in January, pointing to strengthening business conditions in the near term.