Architecture News

Architecture Billings Index Remains Stuck in Summertime Slump

After experiencing an almost four-point drop between April and May from a score of 48.3 to 44.5, the latest AIA/Deltek Architecture Billings Index (ABI) has recovered slightly, moving nearly three points upward to a score of 47.3. Still, with most firms indicating a decline in billings, things aren’t out of the woods yet. (Any score below 50.0 indicates softening business activity at firms.)

Per the AIA, inquiries increased in June after a slight decline in May. Meanwhile, the value of newly signed design contracts hovered just south of 50, meaning it was essentially flat, with nearly equal shares of firms reporting decreases and increases. Backlogs also declined slightly in the second quarter, falling to an average of 6.3 months from 6.6 months in the first quarter. The sharpest decline was among small firms with annual billings of less than $250,000, where backlogs fell from an average of just under five months to slightly over three months.

“Architecture firms remain mired in one of the longest running downturns in the 30-plus year history of the ABI, which now stretches to 41 months without a majority of firms reporting billings growth,” said AIA chief economist Richard Branch in a statement. “The uncertainty over the conflict in Iran along with high interest rates and significant labor shortages will continue to weigh on construction— and architect billings over the next several months.”

Region by region, all scores remained under 50, with the South coming close to cracking the 50-point mark with a score of 49.5—roughly the same as the previous ABI. Billings in the Northeast were the lowest with a score of 44.9, slipping from 46.2

Image courtesy ABI

The sector index breakdown also remained firmly in “soft” territory: Institutional (47.4); commercial/industrial (46.7); multifamily residential (45.6); mixed practice (firms that do not have at least half of their billings in any one other category) (42.7).