Consumers and companies remain cautiously optimistic as the metrics for economic recovery continue to fluctuate.
In the architecture and construction arena, 2010 ended on a positive note with the American Institute of Architects' Architecture Billings Index (ABI) jumping more than two points from November to a score of 54.2. The December posting is the index's most favorable score since 2007. The ABI reflects a nine-to-12-month lag time between demand for design services and architecture billings and construction spending. It is used by the industry, as well as related design fields such as lighting, as one of the main gauges for recovery.
But recovery remains slow. The commercial sector continues to lag behind the residential sector in making progress, as evidenced by the ABI's sector index breakdown: multifamily residential (60.1); commercial/industrial (52.7); institutional (50.6); and mixed practice (47.8).
The association of electrical- and medical-imaging-equipment manufacturers, NEMA, also saw positive movement at the end of 2010 in its Electroindustry Business Confidence Index for North American. The index rose 5.5 points to 68, its highest level since June 2010.
In terms of lighting, NEMA's Lighting System Index (LSI) made a slight gain of 0.9 percent on a 2010 quarter-to-quarter basis. Although this is an improvement, the index remains low overall, hovering at a score of 75 on a scale of 110. According to NEMA, “Significant weakness in both the residential and commercial markets continues to hamper demand for lighting equipment.” NEMA is predicting only modest gains for 2011.
In the meantime, demand for lighting equipment continues to be driven by retrofit projects and the desire for energy savings. Change in lamp purchases will also come with the impending phaseout of general-service incandescent lamps, which will start in 2012. (California has introduced the measures a year early.) The Freedonia Group, a Cleveland-based industry research firm, reports that U.S. demand for lamps is predicted to increase by 3.8 percent through 2013 to $6.8 billion. They also see the purchase of compact fluorescent lamps increasing by 20 percent through 2013, and halogen lamps are also expected to see rapid growth as a result of the incandescent phaseout.
Long term however, and to no surprise, LEDs are expected to gain significant market share over conventional lamps, as the industry as a whole makes a paradigm shift.
"This is more promising news that the design and construction industry is continuing to move toward a recovery. However, historically December is the most unpredictable month from a business standpoint, and therefore the most diffi cult month from which to interpret a trend. The coming quarter will give us a much better sense of the strength of the apparent upturn in design activity."
— Kermit Baker, AIA chief economist