Dec US architecture index rise 5% after hitting record low

21 January 2009 23:36  [Source: ICIS news]

HOUSTON (ICIS news)--An indicator of future US construction activity rose to 36.4 in December, an increase of 5% over the record low of 34.7 in the previous month, the American Institute of Architects (AIA) said on Wednesday.

Despite the increase in the Architecture Billings Index (ABI), the industry remains "mired in a steep downturn", according to the AIA, which bases the index on a monthly survey of its member firms.

Ongoing weakness in the housing sector - December's rating for the residential sector remained flat at 30.0 from November - directly affects the chemical industry, of which housing is an important end market. Each new house contains an average of $16,000 (€12,480) worth of chemicals, according to the American Chemistry Council (ACC).

Scores in the ABI's market segments were flat to weaker except for mixed practice, which increased by 1.3% to 45.1 in December from the previous month, the AIA said. The category refers to firms that may undertake institutional, residential or commercial-industrial architectural projects.

Inquiries for new projects have fallen steadily in recent months, and December's 37.7 is a record low, according to the AIA.

ABI ratings also continued to slide in two of the four ABI regions - the south slipping to 35.3 from 36.8, and the northeast falling to 34.4 from 39.5.

"The inability to get financing for construction projects is a key reason that business conditions continue to be so poor at design firms," said Kermit Baker, chief economist at the AIA.

Baker said construction-related provisions of the economic stimulus package proposed by President Barak Obama will determine whether and how quickly developers can restart projects that were put on hold due to the flagging economy.

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

($1 = €0.78)

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