Mixed Signals: Nonresidential Construction Forecasts See Little Improvement Near-Term

The free-fall in nonresidential development may be bottoming out, if the activity seen by the nation's architects is any indication. Although the much-anticipated "sustained growth" phase is still not expected to materialize until well into next year.

After plunging nearly five points in June, the Architecture Billings Index, which measures new work for architects and is considered a leading indicator of future commercial and institutional construction, jumped nearly six points in July to 43.1, the American Institute of Architects (AIA) reported last week. Meanwhile, the value of new nonresidential construction starts rose 13% in July to an annualized rate of $170.5 billion, rebounding from a steep 26% drop from the end of last year through June, according to McGraw-Hill Construction.

Other reports detected a nominal increase in construction spending and a slowdown in the shedding of industry jobs. And a quarterly survey of the attitudes of nonresidential contractors suggests that while the bottom of the recession appears to be at hand, the recovery likely will be slow and painful

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By Randyl Drummer