Economy Watch: Architects Still Busy in April

The American Institute of Architects' Architecture Billings Index ticked up in April, reflecting a healthy business environment for architects and potentially developers.

The American Institute of Architects reported on Wednesday that its Architecture Billings Index score for April was 52.0, which reflects a healthy business environment for architects and (somewhat later) developers, and even represents a modest uptick compared with March, when the index stood at 51.0. In short, architects are still busy.

The index is a leading economic indicator of commercial and residential construction activity, with nine to 12 months lead time between architecture billings and construction spending. The index thus predicts U.S. construction spending growth, though not always in each property sector.

To formulate the index, the AIA asks its members whether billings increased, decreased, or stayed the same for the month compared to the previous month. Results above 50 on the index point to an increase in billings, while results below 50 mean a decline.

FOMC Feedback

Also on Wednesday, the Federal Reserve released the minutes of the Federal Open Market Committee meeting of May 1-2. The notes reported, regarding commercial real estate, that “CRE loan growth at banks strengthened in March but edged down in the first half of April. Spreads on commercial mortgage-backed securities (CMBS) were little changed over the intermeeting period and remained near their post-crisis lows. CMBS issuance continued to be strong in March but slowed somewhat in April.”

“Respondents… reported easing standards on nonfarm nonresidential loans and tightening standards on multifamily loans, whereas standards on construction and land development loans were little changed in the first quarter. Meanwhile, respondents indicated weaker demand for loans across these three CRE loan categories.”