Business conditions remained soft at architecture firms in June; the American Institute of Architects’ (AIA) AIA/Deltek Architecture Billings Index (ABI) was 46.4. Any score below 50 indicates billings declined.
Kermit Baker, Ph.D., chief economist at AIA, says, “Architecture firms continue to face a period of economic uncertainty, driven by high interest rates and economic volatility. This is the seventeenth consecutive month of a billings decrease and yet, despite the softness firms remain generally optimistic that conditions will start to improve once interest rates stabilize.”
Indicators of future work remained generally soft as well:
- Only slightly more than half of the responding firms reported an increase in inquiries into new work.
- Firms reported a third consecutive month of decline in value of newly signed design contracts.
- While many firms still have a healthy backlog of projects in the pipeline, 6.4 months on average, this is the smallest backlogs have been in more than three years.
The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-12-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
Key ABI highlights for June include:
- Regional averages: Northeast (52.2); Midwest (40.9); South (43.9); West (43.1)
- Sector index breakdown: commercial/industrial (42); institutional (44.3); mixed practice (firms that do not have at least half of their billings in any one other category) (46.9); multifamily residential (45.1)
- Project inquiries index: 51.6
- Design contracts index: 45.6
