US July architectural index rises after two-month slide

18 August 2010 20:27  [Source: ICIS news]

HOUSTON (ICIS)--The American Institute of Architects’ (AIA) monthly measure of future US construction activity rose by nearly two points in July, but uncertain market conditions are making a trend hard to call, the trade group said on Wednesday.

The AIA’s Architectural Billings Index (ABI) increased to 47.9 for July from 46.0 in June.

The index fell in both May and June after reaching a 28-month peak of 48.4 in April. That was the highest rating since January 2008, when revenues at architectural firms began to face recessionary declines, according to the AIA.

“Business conditions at design firms remain quite volatile,” AIA chief economist Kermit Baker said.

“While this recent uptick is encouraging, this state of the industry is likely to persist … as we continue to receive a mixed bag of feedback on the condition of the design market," he said.

New project inquiries fell to 53.1 in July from 57.7 in June, the AIA said, possibly reflecting what Baker described as a market alternately flat, improving or “paralysed by uncertainty.”

The ABI, derived from a monthly survey of AIA-member firms, reflects a lag of 9-12 months between architecture billings and construction spending, according to the AIA. Any rating below 50 indicates a continued negative trend in demand for design services.

Regionally, the index weakened marginally in the US northeast, but rose by 2.6-3.7% for July in the west, south and midwest.

Among the construction markets, design activity increased in the multi-family residential market and in the institutional sector, the latter of which includes schools and hospitals.

Business declined by almost 4% in the mixed-use segment, but only negligibly in the commercial and industrial segment.

Non-residential construction, which includes shopping centres, offices and other projects covered by the ABI, generates $160-230 (€125-179) worth of consumption of chemicals and derivatives for every $1,000 spent on the project, according to the American Chemistry Council (ACC).

($1 = €0.78)

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