Project cancellations limit gains in US August architectural index

22 September 2010 17:09  [Source: ICIS news]

HOUSTON (ICIS)--An indicator of future US construction activity rose in August for the third consecutive month, but the improvement was limited by project cancellations and Americans choosing smaller renovation work instead of new construction, the American Institute of Architects (AIA) said on Wednesday.

The AIA’s Architectural Billings Index (ABI) increased to 48.2 for August, less than a 1% gain from July’s rating of 47.9.

“Project cancellations, regardless of when they happen in the design phase, continue to be the main roadblock to recovery for the construction sector,” AIA chief economist Kermit Baker said.

“Numerous projects have been put on hold indefinitely over the last several months with little hope that they will be resumed,” he added.

He also said work being designed and executed was more likely to be small-scale renovation projects rather than major construction.

However, new month-over-month project inquiries were up by about 3% to 54.6 for August, the AIA said.

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 declined by about 5% in the south, but increased by 1%, 5% and 8% in the west, midwest and northeast, respectively.

Among construction markets, August design activity increased only in the commercial/industrial sector, albeit negligibly.

All other segments saw declines, led by a 4% drop in the institutional construction sector, which includes schools and hospitals.

Non-residential construction, which includes shopping centres, offices and other projects covered by the ABI, generates $160-230 (€120-173) worth of consumption of chemicals and derivatives for every $1,000 spent on the project, according to the American Chemistry Council (ACC).

($1 = €0.75)

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