Although U.S. demand for architectural services retreated sharply in October, from 54.3 to 51.6 in year-over-year comparisons, it appears conditions in the Midwest have stabilized after declines last spring landed the region in negative territory, for several months, according to the American Institute of Architects Architectural Billings Index.
For four consecutive months now, demand for design services in the Midwest has remained positive, scoring in the 51.3 to 51.9 range, as compared to the 47.8 to 49.9 range in May, June and July. For those unfamiliar with the index, any score below 50 denotes declining demand.
True, Midwest scores have yet to climb to the mid-50s, as those for the South and West have, just as it's true that economic recovery in the Midwest has trailed that of other regions for some time now. So, stabilization is significant, assuming it continues.
Although economic upheaval in both Chicago and Springfield has hampered Illinois, the engine that arguably drives the region, economists believe that a rebound in the nation's industrial sector should prove beneficial to Michigan, Ohio and Indiana next year.
Transportation spending reached record levels in Illinois this year, much of it financed by new tax programs or increases to existing ones. However, programs that temporarily create jobs benefit only a few rather than the majority. The prosperity required to put larger numbers of design and construction firms back to work won't occur until Chicago's housing market recovers and the city and state get their financial houses in order. Item No.1 is pension reform.
As for the nation as a whole, “There continues to be a lot of uncertainty surrounding the economic outlook and therefore demand for nonresidential facilities, which often translates into slower progress on new building projects,” says AIA Chief Economist Kermit Baker. “That is particularly true when you factor in the federal government shutdown that delayed many projects that were in the planning or design phases.”