Rounding the Bend

Rounding the Bend

Billings (blue) and inquiries (red) for the past 12 months.

Oil spills, Greek riots, and stock market selloffs be damned, the rebound in the architecture industry continues. In April, the AIA Billings Index reached its highest level since January 2008, when the architectural recession began. While the index has not yet crossed the boundary into positive territory, its continued rise, now for the fourth straight month, suggests that demand for work has finally returned.

“It appears that the design and construction industry may be nearing an actual recovery phase,” AIA Chief Economist Kermit Baker said in a release.

April billings, which were released today by the AIA, rose 2.5 points to 48.5 from 46.1 in March and a recent low of 42.5 in January. The continuous rise is a good sign because the index spent pretty much all of 2009 fluctuating in the mid- to low-40s, and only twice enjoyed consecutive months of improvement. It also brings the index closer than it has been in years to the coveted 50-point threshold at which billings are rising instead of falling. The last positive reading was 51.1 in January 2008. Another positive sign is that inquiries for new work have rebounded from a dip over the past few months, reaching 59.6, up from 58.5 in March and 52.0 in February.

Billings by Region: Northeast (blue), Midwest (red), South (green) and West (purple).

There has been no particular panacea over the past few months, as the various sectors and regions have fluctuated widely, a trend that was reversed last month when all eight rose in concert for the first time since the recession began. That trend did not continue this month, as some regions and sectors dipped down, though others still passed critical thresholds.

The most notable was the Northeast, which reached 51.0, up from 47.0 in March. The Midwest, which was the first region to cross the threshold, doing so in March, dipped back down slightly, hitting 49.2, falling from 50.5 and breaking an 11-month streak of improvement. The West, which has struggled throughout the recession, also slid, reaching 44.7, down from 46.0, while the South recovered to 46.5 from 44.4, its third month of gains following a rough fall. It is the strongest showing for the region since July 2008, though the potential impact of the oil spill, both physically and psychically, to the local economy remains an open question.

Billings by Sector: Multi-family Residential (blue), Commercial/Industrial (red), Institutional (green), Mixed-use (purple)

The sectors were mixed after a few consistently good months, though all still remain in good territory. The big surprise is multi-family residential work, which broke 50 in November and January, the first set of billings to do so, but has since struggled, falling to 45.3 from 47.3 in March, making it the weakest sector. Meanwhile, institutional work posted no gains, holding steady at 46.8. There is good news, though, as mixed-use projects made a big jump, to 48.4 up from 45.0 and commercial/industrial leapt even higher, to 48.5 from 44.7, leaving both sectors poised for a positive turn.

“The economic landscape is improving, although not across the board, but doing so at a gradual pace,” Baker said. “It is quite possible that we will finally see positive business conditions in the foreseeable future.”