The Architecture Billings Index has a Positive Score for the Fifth Consecutive Month

November 4, 2013

The September score for the American Institute of Architects (AIA) Architecture Billings Index (ABI) was positive for the fifth month in row according to the AIA’s press release on October 23, 2013 with a score of 54.3.  The new projects inquiry index was down from the previous month with a score of 58.6.

We were slightly skeptical about the continued positive scores relative to the type and profitability of the construction work available to bid on.  This month it appears that there is skepticism also at the AIA as to what the 5th positive score actually represents.  Based on what Kermit Baker said, the AIA’s Chief Economist, the economic downturn caused firms to find ways to be more productive as a result of a more competitive market place and utilization of new technologies.  In other words, firms have are now billing more frequently (or on time), and this has caused for the increase in architecture firm billings which are used to calculate this index.  Therefore, the increase isn’t necessarily attributable to improvement in market conditions.

What does this mean for construction contractors?  Well, it looks like that 2014 might be more flat than anything, and that significant growth might not be felt by all contractors or sectors.  This also means that contractors should still continue to employ the same business practices as they have been to weather the recession until more substantive data is available to evaluate or support any sustained growth.  That data can be in the form of market evaluation or your construction company’s personal business situation.

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