March 5, 2010

Tight credit markets and weak demand for new projects continue to be main challenges for design and construction industry

Beginning its third year of negative conditions, the Architecture Billings Index (ABI) had a drop of almost three points in January.  As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending.  The American Institute of Architects (AIA) reported the January ABI rating was 42.5, down sharply from a revised reading of 45.4 in December.  This score indicates a continued decline in demand for design services (any score above 50 indicates an increase in billings).  The new projects inquiry score was 52.5, down more than seven points.

"Projects are being delayed or cancelled because lending institutions are placing unusually stringent equity requirements on new developments.  This is even happening to financially sound companies with strong credit ratings," said AIA Chief Economist Kermit Baker.