Economy Watch: Improved Architectural Billings Benefit Construction Industry

Increased demand for design services at the end of 2015 should indicated good prospects for the construction industry this year.

Good news for future real estate development volume: The American Institute of Architects reported on Wednesday that its December Architecture Billings Index came in at 50.9, up from 49.3 in the previous month. The score reflects an increase in the demand for design services, since any score above 50 indicates an increase in billings. The new projects inquiry index was 60.2, up from 58.6 during November.

As a leading economic indicator of construction activity, the index reflects the roughly nine- to 12-month lead time between architecture billings and construction spending. Overall in 2015, there were times when demand for design services decreased, but the Architecture Billings Index concluded the year in positive territory; and it gained during eight of the 12 months of the year.

Survey participants, who are AIA members, are asked whether their billings increased, decreased, or stayed the same in the month that just ended as compared to the prior month, and the results are then compiled by the AIA. The monthly results are also seasonally adjusted to allow for comparison to prior months.

“As has been the case for the past several years, there continues to be a mix of business conditions that architecture firms are experiencing,” said AIA Chief Economist Kermit Baker. “Overall, however, [the index] scores for 2015 averaged just below the strong showing in 2014, which points to another healthy year for construction this year.”