Spokane Journal of Business

Architecture billings index highest since January 2008

Construction-activity leading indicator rises for third straight month

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The American Institute of Architects announced last month that its architecture billings index, a leading economic indicator of construction activity, rose in April, marking the third straight month of such increases.

The index reflects the approximate nine- to 12-month lag time between architecture billings and construction spending, AIA says.

The billings index rating for April was 48.4, up from 46.1 the previous month, the organization says. Any score above 50 indicates an increase in billings. Although the April score reflects a continued decline in demand for design services, it's the highest score since January 2008, when revenue at architectural firms headed into recession. The new projects inquiry index, another indicator monitored by AIA, was 59.6.

"It appears that the design and construction industry may be nearing an actual recovery phase," says AIA Chief Economist Kermit Baker. "The economic landscape is improving, although not across the board, but doing so at a gradual pace. It is quite possible that we will finally see positive business conditions in the foreseeable future."

The northeast part of the U.S. had the highest regional average in the architecture billings index, with a rating of 51, compared with the Midwest region at 49.2, the South at 46.5, and the West at 44.7. In a separate breakdown by industry sector, the commercial-industrial sector was the strongest at 48.5, followed by what's called the mixed-practice sector at 48.4, the institutional sector at 46.8, and the multifamily sector at 45.8.

The architecture billings index is derived from a monthly "work-on-the-boards" survey and is produced by the AIA's economics and market research group. Based on a comparison of data compiled since the survey's inception in 1995 with figures from the U.S. Department of Commerce on "construction put in place," the findings provide an approximately nine- to 12-month glimpse into the future of nonresidential construction activity.

The indexes contained in the full report are derived from a monthly survey sent to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended. Based on the number of respondents choosing each option, a score is generated that represents an index value for each month. The regional and sector data are formulated using a three-month moving average.

Founded in 1857, AIA says it uses a mix of education, government-advocacy, community-redevelopment, and public-outreach activities "to work toward a public environment that is responsive to the people it serves while representing the professional interests of America's architects." It says it has more than 83,000 members, 77 percent of whom are licensed architects, and that the 18,700 architectural firms owned by AIA members had 2008 gross billings of $44.3 billion.

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