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Busted Up: Billings Index Plunges Amid Global Economic Uncertainty

Busted Up: Billings Index Plunges Amid Global Economic Uncertainty

“It’s like déjà vu all over again,” AIA chief economist Kermit Baker said of the steep springtime drop reflected in May’s Architectural Billings Index (ABI). Baker was referring to the trend from 2011, when design activity took a substantial hit after an initially healthy first quarter. “But we don’t want to have a repeat of last year,” he added referring to the sluggish numbers that continued to shadow the profession through the fall. The new numbers were the worst since October and, Baker said, reflect trends in the larger economy.

All of the regional sectors took on water, as the overall score went from a low of 48.4 in April to an even lower 45.8 in May (any score below 50 reflects a decrease).  The South was hit the hardest with a drop to 46.1 from 49.0.  The Midwest wasn’t far behind with a deeper dip to 46.8 from 50.1. The ever-lagging West went to 47.6 from 46.6. And the Northeast dropped to 48.6 from 51.0.

The sector breakdown saw commercial/industrial stay in positive territory at 50.7, but not as strong as last month’s 53.8. Multi-family residential fell to 48.9 from 50.5, institutional went from to 45.6 from 46.6, and mixed practice went to 41.5 from 45.0.

If anything, project inquiries remain something of contiguous silver lining, staying in positive territory for months at a time. May’s score was 54.0, a mild shift from April’s 54.4.  But the reality on the ground belies the inquiry trend. “Last month we were willing to believe it was seasonality,” he said. “But there’s something more than weather related activity; it moved beyond that and it’s not incidental that we had a negative jobs report.”

In addition to national issues, like jobs, Baker said that certain international trends that spook the larger market find their way into the ABI. He cited uncertainty in Europe and slowdowns in China and India as outside factors.

When asked if the ebb and flow just at the fifty mark was the new normal Baker said that the industry, along with the country, is actually in recovery, albeit a very slow one. He noted that he’s hearing fewer negative reports on getting financing. “I don’t think we peaked out, but I think we’ll see longer term growth,” he said.

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