[in-enaction] ABI: Begins 2007 on a High Note {26 months in +}

Architecture Billings Index Begins 2007 on a High Note

­Following the Census Bureau report indicating that January housing 
starts fell to their lowest level since 1997, the Architecture Billings 
Index (ABI), a leading economic indicator of construction activity, 
showed positive conditions across all geographic regions and market 
sectors in January.

With an approximate nine to twelve month lag time between architecture 
billings and construction spending, the forecast remains favorable for 
the nonresidential construction market throughout 2007.  The American 
Institute of Architects (AIA) reported the January ABI rating was 57.9 
(any score above 50 indicates an increase in billings), compared to a 
score of 57.6 in December.

“You have to go back twenty-six months for the last negative score for 
the index,” said AIA Chief Economist Kermit Baker, PhD, Hon. AIA. 
“While the index was positive in 2006, it hovered around the break even 
mark for much of the year.  So far the last three months have seen much 
higher levels of demand for design services and is likely to translate 
into sustained levels of high activity in the construction industry.”

Key January ABI highlights:

   * Regional averages: Northeast (76.0), South (55.6), Midwest (54.4), 
West (53.0)

   * Sector index breakdown: mixed (59.6), institutional (58.8), 
commercial / industrial (57.2) residential (52.1)

   * Inquiries index: 66.8

Peter Lisnic, vice president, senior research analyst at Robert W. Baird 
& Co. added, “Continuing the momentum established in the fourth quarter 
of 2006, January's ABI clearly supports the outlook for healthy growth 
in nonresidential construction markets in 2007.  The strength of the ABI 
readings could even portend market growth above current consensus 
expectations, which may bolster investor appetite for stocks with 
nonresidential exposure.  One question from January's readings might be 
whether demand in the residential sector has indeed reached an 
inflection point.”

* Every January the AIA research department uses a formula from the 
Department of Commerce that re-estimates ABI data based on seasonal 
factors resulting in a recalibration of recent figures.