Positive Economic News from the Construction Industry as the effects of COVID-19 Pandemic decrease

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Positive signals in the construction industry; the AIA’s Architecture Billings Index through April 2021 indicates a strong rebound as the effects of COVID-19 continue to subside.

The Architecture Billings Index (ABI) is a composite index derived from monthly report surveys from American Institute of Architects (AIA) member firms located throughout the country reporting on activity of “work-on-the-boards.” The data is compiled by the American Institute of Architects Economics & Research Group. Using a first-hand survey index from architectural firms, the ABI serves as a leading economic indicator of nonresidential construction activity and provides a glimpse of nonresidential construction activity approximately 9-12 months into the future or the typical time frame for a project to mature from design development through to construction. The ABI is viewed as one of the most even-handed barometers of expected construction and economic activity within that forward-looking time frame because the AIA has no overt political agenda and because the construction industry affects a vast number of trades, professionals and supporting services, which collectively constitutes a substantial force in the economy.

ABI scores are centered at 50, with scores above 50 indicating an aggregate increase in billings and scores below 50 indicating a decline in billings. The recent ABI index released by the AIA in April of 2021 showed a continued strong rebound with an ABI score topping at 57.9, indicating increased billings for the second consecutive month at most reporting firms. In comparison, April’s score marked the highest ABI score since prior to the Great Recession of 2007-2009. Additionally, interest in new projects was reported as extremely strong with a score of 70.8 with the value of new signed design contracts reaching a score of 61.7, the highest score since data collection commenced in late 2010. Firms specializing in commercial/industrial projects saw the largest increase in billings followed by firms with multifamily residential specialization, which saw a decline of the previous winter months.

Combined, this welcomed economic news from AIA indicates that not only are clients talking about starting new projects, but many are also signing contracts to begin that work at a high rate.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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