AIA's Index Predicts Strong Commercial Market

The American Institute of Architects (AIA), based out of Washington, D.C., reported that its Architecture Billings Index (ABI ), an economic indicator of construction activity produced by its economics and market research group, continued along the path of modest growth in October. The index is derived from a monthly survey sent to a panel of AIA member-owned firms. According to AIA, participants are asked whether their billings increased, decreased or stayed the same in the month that just ended; then, according to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month.

The AIA says the index is based on a comparison of data compiled since 1995 with figures from the Department of Commerce on construction put in place. It says the findings amount to a leading economic indicator that provides approximately a nine to 12 month forecast for nonresidential construction activity.

According to AIA, sustained demand for nonresidential projects should continue to offset the lagging housing market's effect on the overall economy. It says the future growth in construction activity will mostly come from the commercial, industrial and institutional markets and further reported that the ABI rating for October 2006 was 51.1, while it says any score above 50 indicates an increase in billings.