Architectural Billings Index
The Architecture Billings Index (ABI) is derived from the monthly Work-on-the-Boards survey conducted by the American Institute of Architects (AIA) Economics Market Research Group. ABI is a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months. Participants in the monthly Work-on-the-Boards survey panel are asked whether their billings increased, decreased, or stayed the same as the preceding month. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month.
Building product manufacturers use it for many purposes, including:
- Forecasting future orders.
- Understanding regional trends.
- Evaluating sales territory performance.
The AIA White Paper, “Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship Between a Billings Index and Construction Spending,” describes the history and development of the ABI. For more information and to subscribe, contact James Chu, Director of Research, (202) 626-8045 or jchu@aia.org, or visit www.aia.org/practicing/economics/AIAS076265.
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1 comments:
Michael, thank you for posting the ABI.
I thought it might be helpful to add a little about how to read the graph, since that dip in the second quarter is disconcerting. The AIA thinks so, too, here: http://www.aia.org/press/releases/AIAB080619?dvid=&recspec=AIAB080619
The ABI measures rate of change. A score of 50 represents no change; scores above 50 represent acceleration, and scores below 50 represent deceleration. It's already seasonally adjusted for us, so we don't have to try to imagine summer slowdowns or holiday rushes into the picture.
So, in trying to understand it for myself, I'm likening the actual design fees to velocity, the spedometer in my car. This makes the ABI a chart of my acceleration and braking, more like the tachometer. (Apologies to those who don't drive a stick shift or who didn't take physics.) A score of 50 is coasting. If I imagine the drive the graphs would then represent, I get a gentle acceleration from the top line, and a continued slowdown from the bottom line.
What's interesting to me is that inquiries are up, but architectural billings continue to decrease. For the AIA, of course, billings are the current reality, not a leading indicator as they are for manufacturers of construction products. Now that I'm reading the graph as rate of change, I see a different picture. I see interest, but no confidence yet, in starting new projects.
Here's hoping some of those inquiries turn into projects soon.
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