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Onward and Upward

Onward and Upward

The Architecture Billings Index is staying up, hitting 52.0 in both December and November, staying positive for two consecutive months for the first in a long time. The last time it touched 51 before slumping was in August (anything over 50 indicates an increase in billings). The roller-coaster volatility of the past few months—we held our breath and skipped reporting September’s down and October’s up—suggests cautious optimism that the index that tracks the approximate nine- to twelve-month lag time between architecture billings and construction spending is finally in a solid swing upward.

Kermit Baker, AIA chief economist, who does not want to repeat last year’s mistake of predicting an end of the downturn too soon, said: “It’s too early to be sure that we are in full recovery mode. Nevertheless, this is very good news for the design and construction industry and it’s entirely possible conditions will slowly continue to improve as the year progresses.”

More good news emitted from the offices of national AIA: Corporate profits have returned to pre-recession levels and as a result businesses are increasing their capital spending to take advantage of historic low rates for borrowing. The AIA’s Consensus Construction Forecast projects a 6.4% spending increase for 2013. Economist Baker notes that institutional work will not feel the uptick as strongly as healthcare, hotels, industrial plants and “places of worship”. As for the housing market, Baker said, it “needs prices to stabilize and to resolve the high number of delinquencies and foreclosures before it can fully recover.”

Of the December highlights, Midwest made the biggest leap to 53.1 (it was 50.9 in November); South hit 54.2; Northeast, 52.6, and West still lags in negative territory at 45.1. Project inquiries are at a healthy sounding 64. Relief is spreading slowly, like molasses, but that’s much more palatable than bitter grapes.


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