2011 and we all seem to be turning the corner – a little at least! The American Institute of Architects (AIA) monthly billings index is acting like a motor having a hard time getting started – chug…chug..chug.chug…cough…chug…Most recently, down a little again. The AIA, according to AIA chief economist Kermit Baker has been and will continue to “take a cautiously optimistic approach”. I agree; no reason to change that outlook.
Why is this index worth watching? I believe it has a lot to say about how optimistically the sponsors in the economy feel about the future. Sponsors referring to those that pay for new buildings, not those who design and construct them. If sponsors are confident about the future and where the economy is headed, they will initiate new work with architects. The AIA billings index tracks these inquiries and historically, inquiries have been a good indicator of billings. Billings are obviously a leading indicator of future construction spend, and so it goes.
At IRVINE, we are fortunate to be active in markets across the country so we not only read various indexes, we have opportunity to touch first-hand the pulse of design and construction professionals throughout the country. Different markets demonstrate differing enthusiasm but as a whole, professionals feel (slightly) better than they generally have for the past 2 years with regards to future prospects. There are certainly significant disruptions within this general elevation of confidence as more than 1 firm I respect has just recently suffered significant forced reductions in staff levels due to work stoppages. This is a very hard adjustment to make and even more difficult to recover and rebuild from. I wish them the best, and continue to believe that they as well will begin to improve their outlooks
On the whole, “cautiously optimistic” about sums it up all around.
