Architecture Billings as a Leading Indicator of Construction

Kermit Baker and Diego Saltes

Business Economics, 2005, vol. 40, issue 4, 67-73

Abstract: Due to the size and cyclicality of construction, a premium is placed on accurately predicting nonresidential construction trends, particularly at turning points in the construction cycle. Given that construction decisions are made by hundreds of thousands of businesses, nonprofit institutions, and government organizations, it is extremely difficult to get comprehensive information on building plans. However, since architects design the overwhelming majority of nonresidential construction projects, gathering information on billings at architecture firms provides leading information on future construction trends. Statistical analysis demonstrates that information provided by architecture firms on trends in their billings is highly correlated with the eventual nonresidential construction activity, with leads of up to one year.Business Economics (2005) 40, 67–73; doi:10.2145/20050406

Date: 2005
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