Is Architectural Billing Index Helpful to Explain Fluctuations in Non- Residential Construction Spending in the United States?

摘要

The United States Census Bureau publishes non-residential construction spending monthly. The non-residential construction spending provides valuable information about the level of non-residential construction activities in the United States. Forecasting non-residential construction spending enables the firms that are active in the non-residential construction market to plan resources properly. However, non-residential construction spending is subject to fluctuations that makes forecasting challenging. The American Institute of Architects has introduced the architectural billing index (ABI) as the leading indicator of construction spending. The objective of this paper is to empirically examine whether ABI is helpful to forecast the fluctuations in the non-residential construction spending in the United States. Time series methods are used to achieve this objective. The results of Granger causality tests show that ABI is helpful to forecast the non-residential construction spending. It also shows ABI leads non-residential construction spending in higher lag lengths (12 months and above). Moreover, the results of cointegration tests show that there is a long-term relationship between ABI and non-residential construction spending. It is expected that this knowledge helps the construction firms to forecast non-residential construction activities that is vital for resource allocation and planning.