It was “more of the same” for the monthly indicators of design activity in January, with the Architectural Billings Index falling almost three points from 45.4 in December to 42.5 in December.
Kermit Baker, chief economist for the American Institute of Architects (AIA), told ZweigWhite he looks at the January figures as “a modestly negative signal,” saying the 42.5 number is similar to the levels of last summer. Any score above 50 indicates growth in design activity.
“It’s certainly a setback,” he said. “There’s no sign of moving toward a recovery.”
But, with his eyes on mid-2010 for several months now, Baker still thinks his target of the second half of the year for a recovery across the industry is reasonable.
“It continues to be a slow, troubled recovery, so we’re taking this month to month,” he said. "If the number is still in the low 40s in April and May, I might retrench a little bit on the idea of mid-year being the focus for the recovery.
“For better or worse, it does turn pretty quickly. There’s enough good news coming out of the broader economy now that we should start seeing better numbers,” Baker said.
He pointed to an increase in retail sales and overall manufacturing as good signs for the ABI, especially when added to the uptick in gross domestic product in the fourth quarter of 2009 and leveling in the unemployment rate.
New project inquiries were at 52.5 for January, but Baker doesn’t see that number meaning much when the plus-50 scores haven’t translated into new work in the last several months. The AIA may adjust the factors that are included in that calculation by the end of the year, he said.
The Midwest ABI was 48.0 for January, with the Northeast (45.7), South (41.3), and West (40.5) rounding out the scores. All stayed at about the same level as December, with the Midwest representing “a pretty healthy number,” Baker said.
Residential led the sector breakdown at 50.1, followed by commercial/industrial (44.9), institutional (43.1), and mixed (40.3). Institutional work tailed off recently after a few solid months, Baker says, largely due to a lack of state and local government funding.