ABI – June 2012 – Dismal Report

The Architectural Billings Index (ABI) for June, 2012 shows a continued, dismal analysis of the state of Architecture & Design.

The overall June rating was at 45.9, virtually unchanged from the May 2012 number of 45.8. (The ABI is rated with a neutral number of 50 representing “no changes” in billings. Numbers below 50 indicate a decrease in billings and numbers above 50 indicate an increase in billings.)

Two regions show a reduction in the rate of decreasing fees (not to be confused with an actual “increase”. The Midwest (48.0) indicates a reduction in the decrease of fees by 2.6% while the South Region (47.6) indicates a reduction in decrease of 3.3% over the previous month.

Conversely, the other two regions show an acceleration of fee reductions. The Northeast (46.4) increased fee reductions by 4.5% and the West (44.3) continued to tank with an increase in fee reductions by an additional 6.9%.

In every region, the industry is far below the highs reported earlier this year. The Midwest is off by 14.3% from the high in February of 56.0. The South is off by 12.5% of the high of 54.4 in November. The Northeast is off by 11.8% from the December high of 52.6 and finally the West is off by only 2.9% from the “high” of 45.6 – which is to say that the West has not crossed into positive territory in the last 18 months. (We have calculated only 18 months historical data.)

Sector analysis clearly illustrates the most affected areas. The Commercial / Industrial sectors are off by 7.5% from May with a reading of 46.9 for June. This represents a 16.3% drop from the high set as recently as March 2012 with a score of 56.0.

The Multi-Family Residential sector is virtually unchanged from May with a June reading of 49.0, up .2% but still down 12.2% from the high in November 2011.

The Institutional sector comes in at 46.0 up from 45.6 in May. While this represents a slowing in reductions from the previous month, this number is still down 10.3% from the high of 51.3 set in December of 2011.

To summarize, every sector & region is down significantly from the highs set in late 2011 and early 2012.

As seen on TV.

We are now entering the period where the Architectural Billings Index (ABI) becomes prophetic. The ABI presents an image of construction activity approximately 9 months in advance. As shown in figure 3 below, the ABI experienced positive territory from November 2011 through March 2012. This means that from July 2012 through December 2012 there will be a noticeable increase in construction activity – Followed by a gigantic ‘THUD’ just after the election in November. (Coincidence?)

Expect lower unemployment during this period as the construction industry (the largest single industry in the nation) experiences a short lived boom. But don’t expect the liberal press to give the full story. Whether through ignorance or intent, the press is likely to report the good news – completely out of context and without regard to analysis. They sure as hell will not report the looming bad news, which could negatively affect their Golden Child’s presidential election.

A more perfect example of the media bias is directly illustrated within the ABI itself.

In August 2011, the AIA reported an unexpected (and unprecedented) spike in the ABI. They reported that the ABI had jumped 6.3 points in a single month to 51.4. The media immediately pounced on the report as a sure sign of an economy that is roaring back to life. As dutiful little liberal zombies they simply reported the numbers fed to them and never bothered to investigate.

Had they even gave a cursory look at the data they would have seen that the number reported was a mathematical impossibility. The number reported (51.4) was 2.4 points higher than the highest number (49.0) shown in all sectors. No “average” number can ever be higher than the highest number from a dataset. It is just not possible. The real number should have been reported as 47.6, a more realistic 2.5 points higher than the previous month.

But liberal reporters – “report”, they don’t “investigate”. In addition, they rarely issue retractions. When they must reluctantly issue a retraction it is often far removed from the original story and receives only a fraction of the press as the false report. In this situation, we could not find a single retraction of the report – not even from the AIA itself. It seems that non-government entities are not obligated by law to issue a revised report, so why bother?

Incidentally, in the following month the ABI “self-corrected” with a number of 46.9, essentially erasing the record setting jump in architectural fees for August. One could hear the sound of crickets chirping over the reports from the media in September. Again, there was no explanation for the anomaly. No attempt to understand what happened or why the sudden jump was followed by a crash – just business as usual.

But fear not – The Critical Architect is here to report the real story. Be sure to join our mailing list to get the real critic’al analysis that architecture has been missing.