Wednesday, May 19, 2010

Growth on the horizon?

The Architecture Billings Index, the monthly gauge of design activity by the American Institute of Architects (AIA), in April reached its highest level since the economic recession began in late 2008, jumping from 46.1 in March to 48.4.
While the latest figure still reflects a decline in activity because it’s below 50, AIA Chief Economist Kermit Baker calls this month’s jump—and the other associated measures that team with the ABI—“pretty encouraging overall.”

“It looks to me like we’re getting closer to the bottom and things are gradually getting better,” he tells The Board Room in an exclusive interview. “It’s one more step down the road. We’re starting to see some of the pieces show up a little healthier.”

Interestingly, one of those healthy pieces is the commercial/industrial sector, which is up from 46.4 in March to 48.5 in April. That's surprising giving the recent prediction by one congressman of a "tsunami in the sector." The residential sector, on the other hand, dropped from 47.6 to 45.8, the second straight month it’s fallen.

Overall, Baker is confident that the industry as a whole will see brighter days ahead, but he doesn’t expect the bounce-back to happen as quickly as the downturn.

“The steep decline is usually pretty typical in these cycles, but we don’t always see that on the upturn,” he says. “For most firms, it’s just marginally better. It’s about more firms seeing growth than decline. At this stage, when things are moving up, it doesn’t rocket off too quickly. I don’t think the profession is going to feel a big difference when the number finally does get over 50. That will probably take a few quarters.”

For more about the Architecture Billings Index, check out the May 24 issue of The Zweig Letter.


  1. Thank you for the economic update, Craig.
    We're all looking for silver linings these days. I particulrly appreciate the AIA link to the Architecture Billings Index article.

  2. Glad you're enjoying what you find here in The Board Room, Collier. I hope you will tell others about us to help us spread the word. I invite you and others in your profession to continue leaving your comments and even to join us as a guest contributor here and there.

    You can also enter our latest contest, which was posted first on Earth Day. Let me know if you have any questions about it or anything else we've got here. I'm always happy to help!

    As for the ABI itself, Kermit Baker has been telling me for months now - as far back as last year - that he was pointing to mid-2010 as the time when things might really start to pick up. It looks like his prediction may be coming true if things keep on this trajectory.


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