US March architectural index falls back into negative range

23 April 2014 17:30 Source:ICIS News

HOUSTON (ICIS)--An indicator of future US construction activity dipped into negative territory for March after only two months in a soft recovery mode, the American Institute of Architects (AIA) said on Wednesday.

The AIA’s Architectural Billings Index (ABI), a reflection of contracted architectural design services, fell to 48.8 for March. Any score below 50 indicates a decrease in demand for architectural design services.

February’s ABI was 50.7, marginally higher than the score of 50.4 in January. Those numbers followed negative November and December 2013 scores of 49.8 and 48.5, respectively.

“This protracted softening in demand for design services is a bit of a surprise, given the overall strength of the market the last year and a half,” AIA chief economist Kermit Baker said.  “Hopefully, some of this can be attributed to severe weather conditions over this past winter.”

It may take a couple more months to ascertain whether there is “a reason for more serious concern,” he added.

The news was not all grim. The AIA’s March project-inquiries index reversed direction to reach 57.9 after several months in a slide.

The ABI, which is 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.

Also in March, the AIA published its first design-contracts index 48.2 which was devised to signal the direction of future architecture billings.

Regionally, the ABI index for March reflected the effect of harsh winter weather in the midwest and northeast US, where the numbers fell by 2.1% and 3.1%, respectively. Scores in the west and south were flat.

In construction categories, the multi-family residential, commercial/industrial and institutional sectors all trended marginally downward, while mixed-practice numbers increased by 2.1% .

The sector and regional categories are calculated as a three-month moving average, while the ABI and project-inquiries indices are monthly averages.

Every $1,000 spent on non-residential construction generates $160-230 worth of consumable chemicals and derivatives, according to the American Chemistry Council.

By Larry Terry