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ABI Retains the ABCs of Prospective Growth

by Houston Agent

The ABI was positive for a third straight month, and multifamily projects again led its growth.

The Architecture Billings Index (ABI), one of the leading economic indicators of future construction activity, reported positive numbers yet again in January, marking the third straight month that the index has been in such territory, according to the most recent press release from the American Institute of Architects (AIA).

A representation of architectural activity, the ABI for January declined slightly to 50.9 but retained its optimistic leanings. Any number above 50 indicates an increase in billings, or, heightened demand for design services. In addition, the new projects inquiry index, a separate measure, was 61.2, down slightly from December.

Operating on a nine to 12 month lag between architecture billings and construction spending, the ABI’s recent increases bode well for future construction activity, said Kermit Baker, the AIA’s chief economist, especially considering the widespread nature of the recent gains.

“Even though we had a similar upturn in design billings in late 2010 and early 2011, this recent showing is encouraging because it is being reflected across most regions of the country and across the major construction sectors,” Baker said.

Baker, though, did dampen his comments somewhat for the immediate months ahead.

“But because we still continue to hear about struggling firms and some continued uncertainty in the market, we expect overall economic improvements in the design and construction sector to be modest in the coming months,” he said.

Regionally, the Midwest showed the most national activity with an index of 53.7, a 0.6 increase from December, while the South, last month’s leader, declined somewhat to 51.6. For yet another month, multifamily residential properties were the leading development with a 52.6 rating, a trend that will likely continue in the coming months.

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