AIA Reports Dip in New Blueprints

After three straight months of improving conditions, the Architecture Billings Index (ABI) fell in May of 2010, according to the American Institute of Architects (AIA).

Billed by the AIA as a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architecture billings and construction spending.

The May 2010 ABI rating was 45.8, down what the AIA calls “substantially” from a reading of 48.4 in April. The score reflects a continued decline in demand for design services (any score above 50 indicates an increase in billings), and comes on the heels of what in April was the highest score since January 2008.

At that time, revenue at architecture firms peaked before heading into recession, and the new projects inquiry index was 55.5. “

This dip is somewhat of a surprise since it appeared that conditions were pointing toward a recovery,” says AIA Chief Economist Kermit Baker. “The overriding issue affecting the entire real estate sector is unusual caution on the part of lending institutions to provide credit for construction projects that apparently would be successful in this economic environment.”

Adds Baker, “An amendment has passed the House that would help lenders and borrowers as they attempt to work out their loans under terms that are mutually acceptable, avoid large numbers of commercial foreclosures and free up credit that can be used more constructively. If this passes in the Senate, then some much-needed relief will available for the struggling design and construction industry.”