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ABI Index Falls. The American Institute of Architects’ Architecture Billings Index (ABI) - a leading economic indicator of non-residential construction activity 9-12 months into the future – rose 0.6 points to 43.4 in December after a sharp decline the month before. The reading remained firmly below 50 - meaning billings are still declining – as it has since January 2008.

Bright Spot in Residential Activity. While three of the four sectoral indices we track fell in the month, the Residential Index rose 1.5 points to the 51.0, the first reading above 50 since 2007. As the sectoral and regional indices are three-month moving averages, the score above 50 is more powerful as it reflects the average of a 3-month period. The reading is a meaningful increase from 43.8 just four months ago and while it’s too soon to say residential activity is back on the rise, we welcome the good news. The Mixed Practice Index fell by 2.1 points to 38.1, the lowest score of the year, while the Commercial/Industrial Index declined 0.7 points to 42.7 and the Institutional Index dropped to 44.2 – all signs of continued weakness and completely unsurprising.

Regional Averages Mixed. Two of the four regional indices rose during December but all four indices remained below 50. The Northeast Index rose 1.1 points to 48.8, while the Midwest Index also increased 1.1 points to reach 46.6 and both indices came in at the highest score since January 2008. The Southern Index fell 1.9 points to 43.2 and the index for the West, which has been the weakest region during the current recession, fell another point to 40.0.

Outlook. The year2009 was a dismal one for construction activity as new projects were held back by the tight credit markets with very little benefit from any stimulus spending. We hope to see a brighter 2010, but available financing will be the first signal to a sustained rise in billings.

Disclosure: No positions