From Calculated Risk:
Every building sector is now expanding and new project inquiries are strongly positive (down from February, but still at 60.1). Note: This includes commercial and industrial facilities like hotels and office buildings, multi-family residential, as well as schools, hospitals and other institutions.
According to the AIA, there is an “approximate nine to twelve month lag time between architecture billings and construction spending” on non-residential construction. This index suggests some increase in CRE investment in the second half of 2013.
CRE=commercial real estate. The Architectural Billings Index is very noisy month to month, but it’s a great leading indicator of economic activity. In the graph here from Calculated Risk, you can see both the noisiness and the general trend lines.
A few things to keep in mind as you look at this graph:
- Any number below 50 indicates contraction. Any number above 50 indicates expansion.
- The ABI is a great measure of commercial real estate expansion, governmental expenditures, etc., but it says very little about residential real estate investment.
- You can see in the graph the dramatic declines that continued throughout all of 2008.
- Keep in mind, too, that the “rebound” in the graph at the beginning of 2009 does not indicate improvement but less dramatic declines. Any number below 50 indicates contraction.
