NEW YORK A forward-looking index of U.S.
nonresidential construction activity fell to a record low in
March, reflecting the impact of the credit crunch on the
broader economy, an architects' group said on Wednesday.
The Architecture Billings Index fell two points to 39.7
last month, the lowest since the survey began in 1995, the
American Institute of Architects said.
The March decline follows a nine-point drop the previous
month, and suggests weaker nonresidential construction activity
about nine to 12 months in the future, the AIA said. A reading
below 50 indicates contraction.
"Activity at architecture firms is coming to a screeching
halt," said the group's chief economist, Kermit Baker. The
credit crunch has "sloshed over" into a broader downturn in the
economy, he added.
"Why put up new retail space if consumer spending is
declining? Independent of whether or not you get financing for
these projects, some of them just don't make sense in this
All U.S. regions showed weakness in March, with the South
slightly less hard-hit than other parts of the country, partly
reflecting the strength of the energy sector in Texas.
Still, the downturn is likely to be less steep than the
last one -- in 2001 and 2002 -- because this time the
construction upswing created less excess inventory, Baker said.
The drop in billings reflects caution among architecture firms'
clients, and the downturn's length will depend on how the
broader economy performs.
"Developers and property owners that have projects in the
design queue say, 'the economy's turned and we want to hold off
on these projects until it recovers,"' Baker said.
Nonresidential building has held up relatively well over
the past two years, even as the U.S. housing market has
slumped. But some companies that sell into the nonresidential
construction market, including diversified manufacturer
Honeywell International Inc (HON.N). (HON.N), have started to
forecast a downturn.
Other companies that generate revenue from nonresidential
construction include Cooper Industries Ltd CBE.N, which makes
electrical products and tools, lighting maker Acuity Brands Inc
(AYI.N), electrical components maker Thomas & Betts Corp.
TNB.N, and Johnson Controls Inc (JCI.N), which provides
heating, ventilation and cooling systems.
(Reporting by Nick Zieminski; Editing by Steve Orlofsky)