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Decline Continues for Architecture Billings, New Report

Image courtesy of The American Institute of Architects.

Business conditions remain soft at architecture firms in June with the AIA/Deltek Architecture Billings Index (ABI) reporting a score of 46.4. Any score below 50 indicates that billings decline, although somewhat fewer firms reported a decline in billings in June than in May.

"Architecture firms continue to face a period of economic uncertainty, driven by high interest rates and economic volatility,” said Kermit Baker, PhD, AIA Chief Economist. “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 that backlogs have been in more than three years.

The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-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 (42.0); 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

The regional and sector categories are calculated as three-month moving averages and may not always average out to the national score.

Visit AIA’s website for detailed information about this, and past billing index reports.