February 22, 2006—The Architecture Billings Index (ABI), a leading economic indicator of nonresidential construction activity, was positive in January for the twelfth consecutive month, and fourteen out of the last fifteen months.
Based on the approximately six to nine month lag time between architecture billings and construction spending, business conditions appear favorable for the nonresidential construction market in 2006 and possibly into 2007. The American Institute of Architects (AIA) reported the January ABI rating was 55.5 (any score above 50 indicates an increase), up from the seasonally adjusted score of 53.7 in December 2005.
According to Department of Commerce figures on Construction Put in Place, spending on nonresidential construction in 2005 totaled $487 billion accounting for four percent of GDP. The impact on the overall economy is significant considering that the AIA Consensus Construction Forecast Panel has anticipated close to five percent real growth in nonresidential building construction this year, with growth evenly balanced between the commercial / industrial and institutional sectors.
The Architecture Billings Index is derived from a monthly “Work-on-the-Boards” survey and produced by the AIA Economics & Market Research Group. Based on a comparison of data compiled since the survey’s inception in 1995 with figures from the Department of Commerce on Construction Put in Place, the findings amount to a leading economic indicator that provides an approximately six month glimpse into the future of nonresidential construction activity. For more information, visit the AIA Web site.
