Architectural Billings Index slips back into negative territory
After the first positive reading on the Architectural Billings Index since 2008, the index slipped back into negative territory in October. The index fell to 48.7, according to the American Institute of Architects, which released its data Wednesday. The index was 50.4 in September. The AIA sets a benchmark value of 50 for its indexes: Anything above that number is considered to be positive and anything below negative. The ABI’s monthly data is derived from questionnaires distributed to a panel of AIA member-owned firms. Participants are asked whether their billings increased, decreased or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month. The new projects inquiry index fell along with the billings index, down to 61.7 from 62.3 in September. The index reading affirms AIA chief economist Kermit Baker's belief last month that one good month in the index does not necessarily signify substantial improvement. He believes tight lending is driving the index down. “This is disappointing news, but not altogether that surprising,” said Baker. “We were anticipating a slow recovery period, and it is likely that there will be some fits and starts before conditions show consistent improvement. Right now, reluctance from lending institutions to provide credit for construction projects and a sluggish economy are the main impediments to a revival of the design and construction industry.” The regional buildings index was highest in the Northeast at 54.5, followed by the Midwest at 51.8, the South at 48.6, and the West at 44.3. The index was the highest in the commercial/industrial sector (54.5), followed by the institutional sector (50.8), the multifamily residential sector (49.1) and the mixed practice sector (43.2). Write to Christine Ricciardi.