After several months of sustained growth, demand for design services in Midwest states declined in December, the first time since June, according to the American Institute of Architects (AIA) Architectural Billings Index. In month over month comparisons, the index plunged from 51.6 to 47 between November and December. Any value below 50 denotes declining demand.
The news was worse in the Northeast, where the index plummeted from 47.5 to 42.8, marking a third consecutive month of declines and the steepest since 2009, during the depths of recession.
AIA Chief Economist Kermit Baker conjectured the declines may have been weather related, but also indicated he thought that was unlikely. The Midwest was chilly in December, but the real blast didn't arrive until January. And it's unlikely that cold weather would have cast a chill over projects that require extensive planning over extended periods of time.
Fact of the matter is economic growth in the Midwest has been topsy turvy since the nation emerged from recession. Indiana and Ohio have been particularly sluggish of late, resulting in large losses in construction employment last year. According to economists, one of the major culprits is waning demand for the industrial goods those states produce. Star players earlier in the recovery now find themselves in the cellar. Earlier, Illinois, Wisconsin and Michigan were dragging down the region, in part due to fiscal issues plaguing their governments.
None of them is out of the woods yet – Illinois' economy and unemployment rate remain among the worst in the nation – but conditions have improved, if only incrementally. Illinois has finally passed a version of pension reform. Michigan remains intact following Detroit's implosion.
Let's see what 2014 brings.