Wednesday, August 18, 2010

AIA: Architecture Billings Index shows contraction in July

by Bill McBride on 8/18/2010 09:36:00 AM

Note: This index is a leading indicator for new Commercial Real Estate (CRE) investment.

The Business Times reports that the American Institute of Architects’ Architecture Billings Index increased to 47.9 in July from 46 in June. Any reading below 50 indicates contraction.

'We continue to receive a mixed bag of feedback on the condition of the design market, from improving to flat to being paralysed by uncertainty,' said AIA Chief Economist Kermit Baker.
The ABI press release is not online yet.

AIA Architecture Billing Index Click on graph for larger image in new window.

This graph shows the Architecture Billings Index since 1996. The index has remained below 50, indicating falling demand, since January 2008.

Note: Nonresidential construction includes commercial and industrial facilities like hotels and office buildings, as well as schools, hospitals and other institutions.

According to the AIA, there is an "approximate nine to twelve month lag time between architecture billings and construction spending" on non-residential construction. So there will probably be further declines in CRE investment into 2011.

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