Architecture billing increase a good sign for industry.

After hovering around the no growth mark for the past three months, the Architecture Billings Index (ABI) jumped in August to its highest mark since July 2005.

Demand for commercial / industrial projects continues to lead the way for increased billings, along with architecture firms on the East and West coast reporting a significant upturn in business. Based on the approximate six to nine month lag time between architecture billings and construction spending, the latest figures are very encouraging for the overall economy because they suggest a strong outlook in the commercial construction market well into 2007.

The American Institute of Architects (AIA) reported the August ABI rating was 59.5 (any score above 50 indicates an increase in billings), a substantial rise from the 51.8 mark in July.

"The August numbers showed a sharp rebound from the unusually slow conditions of the past three months. It appears that this non-residential construction spending cycle has sustained momentum," said AIA chief economist Kermit Baker, PhD, Hon. AIA.

"Despite higher short-term interest rates and increasing costs of building materials, the nonresidential construction sector continues to help fuel the economy during a time when the housing market is suffering."

Among the highlights of the ABI report:

* Regional averages: West (61.2), Northeast (57.3), South (56.7), Midwest (49.1);

* Sector index breakdown: commercial / industrial (61.4), institutional (55.7), mixed (53.9), residential (48.0)

* Billings inquiries index: 64.3, up slightly from the 64.0 score in July.

CIBC World Markets Industrial Multi-Industry Analyst, Christopher Glynn said, "The improvement from July in each subcategory of the ABI is a critical datapoint at this point in the construction cycle, where concerns over the direction of the macro economy and the impact of building materials inflation have created concern over the environment for construction spending.

"With the continued acceleration of the commercial/industrial billings and the strong historical correlation to future construction spending, we note improved visibility for electrical equipment manufacturers with meaningful exposure to non-residential construction."