Trends Indicate a Slowdown in Architecture Billings
THE MOST RECENT REPORT: SEPTEMBER 20, 2023
Activity in Western U.S. contracts for the sixth consecutive month
WASHINGTON – The AIA/Deltek Architecture Billings Index (ABI) eased modestly in August, with a score of 48.1, marking the eleventh consecutive month of essentially flat billings at architecture firms. Any score below 50.0 indicates decreasing business conditions. This follows a period of robust growth in 2021 and 2022. While inquiries into new projects remained relatively strong in August, the value of newly signed design contracts declined for the first time since April, indicating that fewer clients signed contracts for new projects than in the prior three months.
“Business conditions at architecture firms continue to be sluggish,” said Kermit Baker, PhD, AIA Chief Economist. “New project work coming into architecture firms as well ongoing project activity remain stalled in a relatively narrow range and exhibit very little month-to-month variation. Through this pause has taken pressure off tight staffing conditions across the profession, there is considerable uncertainty over the direction of future activity. .”
Business conditions also remained soft at firms with a multifamily residential specialization and declined modestly at firms with an institutional specialization. However, firms with a commercial/industrial specialization reported billings growth for the third month in a row in August.
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 August include:
- Regional averages: Northeast (50.6); South (49.9); Midwest (48.1); West (45.8)
- Sector index breakdown: commercial/industrial (51.5); institutional (49.4); mixed practice (firms that do not have at least half of their billings in any one other category) (46.9); multifamily residential (44.1)
- Project inquiries index: 54.8
- Design contracts index: 47.9
The regional and sector categories are calculated as three-month moving averages and may not always average out to the national score.
Interpreting the ABI:
The Architecture Billings Index (ABI) is a leading economic indicator of construction activity. It is produced by the American Institute of Architects (AIA) and it reflects the approximate nine-to-twelve month lead time between architecture billings and construction spending.
The ABI is based on a monthly survey of architecture firms that asks respondents to rate the level of their billings (or the amount of new design contracts) as either "increase," "decrease," or "no change" from the previous month. The results are then compiled into an index, where a score above 50 indicates an increase in billings, and a score below 50 indicates a decrease in billings.
The ABI is widely used in the construction industry, as well as by economists and analysts, to track the health of the construction market and to forecast future building activity. It is considered a leading economic indicator because changes in architecture billings often precede changes in overall economic activity, such as employment and GDP.
The ABI provides a snapshot of the demand for design services as well as an indication of the near-term outlook for the construction industry.
The survey panel asks participating architectural firms whether billings increased, decreased or stayed the same in the month that just ended. According to the proportion of respondents choosing each option, a score is generated, which represents an index value for each month.
- An index score of 50 indicates no change in firm billings versus the previous month.
- A score above 50 indicates an increase in firm billings versus the previous month.
- A score below 50 indicates an decrease in firm billings versus the previous month.
- NOTE: Index numbers cited for the last three reported months are preliminary.
- The regional and sector categories are calculated as a 3-month moving average, whereas the national index, design contracts and inquiries are monthly numbers.
Source: The American Institute of Architects (AIA)
National Architecture Billings Index
Source: The American Institute of Architects (AIA)
RELATED: Historical ABI Data 2008 - 2022 »
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Regional Architecture Billings Index
(Three month rolling average)
Source: The American Institute of Architects (AIA)
Sector-Specific Architecture Billings Index
Three-month rolling average
Commercial/Industrial
Buildings related to commerce and industry. Office space, banks, retail, factories, etc.
Institutional
Schools, civic/government buildings, museums, hospitals, etc.
Multifamily Residential
Town homes, apartment complexes, condominiums, etc.
Mixed Practice
Firms that do not have at least half of their billings in any one other category.
Source: The American Institute of Architects (AIA)
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