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AIA Says Design Billings Down in April

By Eric Jay Toll for Arizona Builder’s Exchange

ABIApr2013After nine months of continuous design billing index increases, the streak has ended. The Architecture Billing Index dropped over three points to 48.6 from 51.9 in March and slid 5.6 points from the 12-month peak of 54.9 in February.

Any number higher than 50 is an upward movement in design activity. The index is a 9 to 12 month leading economic indicator for construction activity. The April dip projects a slowing of non-residential construction in the first quarter 2014.

AIA says that multifamily housing starts dropped sharply in April. During this recovery, their chief economist Kermit Baker says, there has been a slowing in the spring. He says this indicates that the construction sector remains choppy. In Arizona, the slight dip in construction employment during the month also backs AIA’s analysis—after months near the top of the different hiring categories, Arizona construction jobs declined by 100 in April (AZBEX, May 21).

West Shows Modest Gains; Residential Up, but Slowing

The ABI slide was weighted heavily with declines in the Northeast and Midwest. In the South, design firms reported healthy gains and the West showed modest growth. The Northeast and Midwest indices declined to 48.2 and 49.4 respectively. The South moved up to 52.6 and the West hovered at 50.7.

In sectors, residential designers reported growth—the twelfth straight month—but the pace slowed dramatically. Commercial/industrial sectors slid in April, which AIA says continues its roller coaster pattern. For the last nine months, institutional design firms have enjoyed gains, but the growth rate is very slow. The residential index was 52.0—despite a decline in multifamily assignments. Commercial/Industrial design projects dropped to 49.2 and Institutional jobs barely kept a nose above water at 50.1. The association says that firms are reporting smaller projects on average with a shorter design phase than typical projects during the last construction boom.

The ABI for April still lets optimists smile, but tempers the hopes for an accelerated recovery. The good news is the budget sequestration has not had the draconian negative economic impact some expected—yet. The tempering is that the recovery is still fragile and is not generating either the consumer income or new jobs necessary to decisively grow the economy.

Read the full report at AIA