Billings Rise, But Forecast Still Bleak
The Architectural Billings Index rose to 46.1 in June, nearly three points higher than May’s 43.4 score. The inquiries score also rose, to 51.8, after dropping to 46.5 in May – the lowest inquiries score in the ABI’s 13-year history. A number above 50 indicates an increase, and below 50, a decrease.
Despite the slight uptick, the future doesn’t look bright. This is the fifth straight month that the billings score has dipped below 50. In March, billings plummeted to an all-time low score of 39.7 (RECORD, May 2008).
The American Institute of Architects (AIA), which compiles the index based on surveys sent to 300 mainly commercial architects, says it doesn’t expect billings to increase in upcoming months. And in fact, its recently released Consensus Construction Forecast—a semiannual report—projects that commercial and industrial activity will be down 1.9 percent this year, followed by a 6.7 percent drop in 2009. The office and retail sectors will be the hardest hit, according to the report.
AIA chief economist Kermit Baker says the decline coincides with the troubled housing market and the overall economy’s stunted growth. Creditors are less willing to lend money for construction projects right now. “The one bit of good news,” Baker says, “is that this contraction in activity is likely to be considerably milder than the construction recessions of the early 1990s and earlier this decade.”