Upturn in construction activity expected; the AIA’s Architecture Billings Index through August 2021 indicates continued economic strength despite growing supply chain issues.
The Architecture Billings Index (ABI) is a composite index derived from monthly report surveys from American Institute of Architects (AIA) member firms located throughout the country reporting on activity of “work-on-the-boards.” The data is compiled by the American Institute of Architects Economics & Research Group. Using a first-hand survey index from architectural firms, the ABI serves as a leading economic indicator of nonresidential construction activity and provides a glimpse of nonresidential construction activity approximately 9-12 months into the future or the typical time frame for a project to mature from design development through to construction. The ABI is viewed as one of the most even-handed barometers of expected construction and economic activity within that forward-looking time frame because the AIA has no overt political agenda and because the construction industry affects a vast number of trades, professionals and supporting services, which collectively constitutes a substantial force in the economy.
ABI scores are centered at 50, with scores above 50 indicating an aggregate increase in billings and scores below 50 indicating a decline in billings. The recent ABI index released by the AIA in August of 2021 strengthened at 55.6 or 1.0 point higher than July’s ABI of 54.6, indicating continued increased billings at most reporting firms. The design contracts score, however, moderated in August at 56.6, falling 1.4 points from July’s score of 58.0 while new project inquiries remained stable at 64.7, falling 0.3 points from July’s score of 65.0.
According to AIA’s chief economist, Kermit Baker, these numbers show a continued surge in design activity through August and project an expected upturn in construction activity through the fourth quarter and continuing into 2022. However, Mr. Baker adds that such expansion is “expected to magnify already serious problems associated with price inflation and the availability of many construction products and materials, as well as emerging labor shortages in the industry.”