In what can only be described as an about face, the Architecture Billings Index (ABI) took a bit of a tumble into negative territory last month. The April ABI fell to 47.6 from 50.6, beating even October’s low of 48.7. At the end of 2010, words like “rebound” were cautiously bandied about, but for the past three months the ABI skated along the edge of positive territory hovering around 50.
Now with numbers the lowest they’ve been for the last six months AIA Chief Economist Kermit Baker began to analyze reasons why. “We get a lot of comments on the panel that we tried to get a sense of what’s going on and we got some reasons of what could be with us for while,” said Baker. He noted that construction projects funded under the federal stimulus completed their design work and needed credit to move forward. “A lot of the public stimulus has run its course, and the theory was that the private sector would pick up where the stimulus ran out,” said Baker. But 60 percent of the panelists responded that delayed financing has them sitting on at least one incomplete project. “Some of them are probably dead,” Baker said of the projects.
In addition to the credit crunch, severe weather also depressed figures. The storms that whipped through parts of the South last month had an effect and analysts are keeping an eye on the rising waters of the Mississippi.
Indeed, as a region the South dipped further down from 49.7 in March to 48.3 in April. The Midwest kept its head above water at 51.1, but this was less than March’s 53.5 gain. The Northeast remained steady at 51.2 from March’s 51.4. Unfortunately, the West took their all-too-familiar backseat. After finally pulling into positive territory at 50.6 in March; they’ve stumbled back to 47.7. The sector breakdown saw residential rise from 50.8 to 53.9, commercial/industrial fell from 54.7 to 49.9, institutional fell further from 48.0 to 45.9, and mixed practice slipped from 49.8 to 45.2. Project inquiries for the month were at 55.0.
Baker pointed out that the overall trend of the last five months was growth, but with three months having numbers hovering around 50 it’s not surprising when it dips. “We don’t get too excited about one month on the upside or one month on the downside,” he said. Still, while there’s not much room for cheer, Baker noted that there is room for hope. “There’s some residual optimism of two quarters of positive numbers,” he said, noting that downward numbers could be a blip. “We’ll see if that upward trend is something that could be sustained.”