Recognized by Reuters as a leading indicator of U.S construction activity, the American Institute of Architects reports that the Architectural Billings Index (ABI) for December was 52, a sign that the economy is continuing to improve.

The ABI is compiled by the AIA Economics and Market Research Group by surveying design firms across the country to determine whether their billings increased, decreased or stayed the same from the previous month.

The ABI is considered an important leading economic indicator because design services for nonresidential projects such as commercial buildings, schools or hospitals prefigure a cascade of other sales and services to follow, from construction services to building materials to furnishings. Despite this week’s report that the GDP contracted slightly in the fourth quarter of 2012, the latest ABI report showing continued growth in “work-on-the-boards” is encouraging.

Design work is typically on the boards nine to 12 months before construction starts, which is why the ABI is considered a leading indicator. According to the AIA, December was the fifth consecutive month of growth.

“While it’s not an across the board recovery, we are hearing a much more positive outlook in terms of demand for design services,” commented AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.

“Moving into 2013 we are expecting this trend to continue and conditions improve at a slow and steady rate. That said, we remain concerned that continued uncertainty over the outcomes of budget sequestration and the debt ceiling could impact further economic growth.”

The ABI in November 2012 was 53.2, up two points from a year ago and the highest reading since November 2007.

Key December ABI Highlights:

Regional averages: Midwest (55.7), Northeast (53.1), South (51.2), West (49.6)

Sector index breakdown: commercial / industrial (53.4), mixed practice (53.0), institutional (50.9), multi-family residential (50.5)

Project inquiries index: 59.4

Read the AIA media release here.