June marked the third consecutive decline in revenue at U.S. architecture firms as measured by the Architecture Billings Index (ABI). 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 June ABI score was 46.3, almost a full point from a reading of 47.2 the previous month. This score reflects a continued decrease in demand for design services (any score above 50 indicates an increase in billings). However, the new projects inquiry index was 58.1, up sharply from a mark of 52.6 in May.
“This seems to be a case of not thinking it can get any worse –- and then it does,” said AIA Chief Economist, Kermit Baker. “While a modest turn around appeared to be on the way earlier in the year, the overall concern about both domestic and global economies is seeping into design and construction industry and adding yet another element that is preventing recovery. Furthermore, the threat of the federal government failing to resolve the debt ceiling issue is leading to higher borrowing rates for real estate projects and should there actually be a default, we are likely looking at a catastrophic situation for a sector that accounts for more than ten percent of overall GDP.”
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Jim Lucy Blog
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Jim Lucy has been wandering through the electrical market for more than 30 years, most of the time as an editor for Electrical Wholesaling, Electrical Marketing newsletter and CEE News. During that time he and the editorial team for the publications have won numerous national awards for their coverage of the electrical business. He showed an early interest in electricity, when as a youth he had an idea for a hot dog cooker. Unfortunately, the first crude prototype malfunctioned and the arc nearly blew him out of his parents' basement. Before becoming an editor for Electrical Wholesaling magazine and Electrical Marketing, he earned a BA degree in journalism and a MA in communications from Glassboro State College, Glassboro, NJ., which is formerly best known as the site of the 1967 summit meeting between President Lyndon Johnson and Russian Premier Aleksei Nikolayevich Kosygin, and now best known as the New Jersey state college that changed its name in 1992 to Rowan University because of a generous $100 million donation by N.J. zillionaire industrialist Henry Rowan. Jim is a Brooklyn-born Jersey Guy happily transplanted in the fertile plains of Kansas for the past 20 years.