Oppenheimer’s Architecture Billing index Update (ESSX, MGRC, RBA)

Oppenheimer is out with a research report this morning, where it takes a look at the recently released July Architecture Billings Index (

) data and what it means for its coverage space. The AIA's Architecture Billings Index (

) increased 1.9 points to 47.9 in July from 46.0 in June. While still indicating contraction in non-residential construction activity, July's reading is the second highest since January 2008 (the highest being 48.4 in April 2010). The Oppenheimer analyst noted that the ABI is an estimated 9- to 12-month leading indicator of US construction activity, with 50 representing the growth/decline threshold. July's sub-50 reading (continuing a 30-month sub-50 trend) indicates a continued decline in demand, though improving, for architectural design services. AIA Chief Economist Kermit Baker commented, "Business conditions at design firms remain quite volatile. While this recent uptick [in billings] is encouraging, this state of the industry is likely to persist for a while as we continue to receive a mixed bag of feedback on the condition of the design market from improving to flat to being paralyzed by uncertainty." Companies in Oppenheimer’s coverage space with exposure to non-residential construction trends include (Along with their relative exposure): Essex Rental Corp.

~10%, McGrath RentCorp

low-/mid-teens, Ritchie Bros Auctioneers

<1/3rd, Mobile Mini Inc.

~30%, RSC Holdings Inc.

~35%, United Rentals Inc.

~65%+, and American Reprographics Co.

~75%+.