{"id":20142,"date":"2023-03-13T08:00:08","date_gmt":"2023-03-13T12:00:08","guid":{"rendered":"https:\/\/www.foundationsoft.com\/?p=20142"},"modified":"2024-05-21T15:08:34","modified_gmt":"2024-05-21T19:08:34","slug":"2023-q1-industry-report-paying-attention-to-the-architectural-billing-index","status":"publish","type":"post","link":"https:\/\/www.foundationsoft.com\/learn\/2023-q1-industry-report-paying-attention-to-the-architectural-billing-index\/","title":{"rendered":"2023 Q1 Industry Report: Paying Attention to the Architectural Billing Index"},"content":{"rendered":"

As ABC\u2019s Chief Economist (not to mention CFMA\u2019s Economic Advisor), Anirban Basu is a professional whose opinion I trust. And I have the privilege of hearing him speak several times a year. He often tends to describe himself as a purveyor of truth and realistic expectations. To borrow and amend that phrase, I\u2019d characterize myself more as a purveyor of awareness and caution. And caution is something that I think is needed in the construction industry right now.<\/p>\n

There was a general air of optimism among contractors earlier in the year and it\u2019s easy to understand why. The stock market closed on a high note in January \u2014 with the Dow Jones and S&P 500 experiencing some of the strongest starts they\u2019ve had in years.[1]<\/a> (Although neither came close to reaching the levels they hit in early 2022). The U.S. Bureau of Labor disclosed that the inflation rate dipped down to 6.5% in December of 2022 \u2014 almost three points lower than the 9.1% reported in January 2022.[2]<\/a> Even the fears of deflation had been steadied \u00a0\u2014 the market indicated prices were rising at a slower pace than this time last year.<\/p>\n\"eBook<\/a>\n

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And then February happened: the stock market closed below its January numbers with all the major market indexes falling.[3]<\/a> Dow Jones recorded the lowest closing level of 2023 so far.<\/p>\n

With the market giving off such mixed signals, it\u2019s becoming apparent that we need to pay attention to a range<\/em> of economic indicators to really gage how the economy is moving.<\/p>\n

Stock trends and inflation reports \u2014 although important \u2014 aren\u2019t the only pieces of data we should be focusing on because they predict and reveal current and near-future trends. For long-term success, contractors also need to be aware of what\u2019s developing six months to even two years from now. Which is where the Architectural Billing Index comes in.<\/p>\n

<\/span>What is the Architectural Billing Index?<\/strong><\/span><\/h2>\n

The Architectural Billing Index, or ABI, is an economic indicator that tracks the demand for nonresidential construction activity. Basically, the ABI monitors whether or not architects are busy and, if so, whether or not architects will continue<\/em> to be busy. This is based on current billings and estimated design contracts.<\/p>\n

The ABI is produced by the American Institute of Architect\u2019s Economic and Research Group. Every month, a Work-on-the-Boards survey is sent out to all of AIA\u2019s member-owned construction firms. The survey asks the owners and partners to rate and describe their company\u2019s billing activity \u2014 having them indicate if the number of billings and invoices grew, declined or remained flat.<\/p>\n

The gathered information is then compared to the Value of Construction Put in Place survey \u2014 which is conducted monthly by the Department of Commerce to estimate the total dollar value of construction work done in the US (both residential and commercial). The demand for architectural work is determined by measuring the amount of work reported in AIA\u2019s survey against the estimated amount of dollars made that month in commercial construction.<\/p>\n

The Architectural Billing Index is the result of these survey comparisons and is scored on a scale above or below 50.<\/p>\n