Ongoing Decline in Billings Persists at Architecture Firms Nationwide

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Billings in the multifamily sector fall for 24 consecutive months, remaining sluggish

THE MOST RECENT REPORT: September 18, 2024

August marked the nineteenth consecutive month of declining billings for architecture firms, according to the latest data from the AIA/Deltek Architecture Billings Index (ABI). The pace of decline during August accelerated, posting an ABI score of 45.7, a decrease from 48.2 in July.

“Unfortunately, even the impending interest rate cuts didn’t move the needle on project inquiries or new design contracts at architecture firms,” said Kermit Baker, PhD, AIA Chief Economist. “Hopefully, once the trajectory of further cuts gets clarified, delayed projects will restart, and new projects will gather momentum.”

Key ABI highlights for August include:

Regional averages: Northeast (48.2); South (46.8); Midwest (46.6); West (45.7)
Sector index breakdown: mixed practice (firms that do not have at least half of their billings in any one other category) (48.6); institutional (47.4); commercial/industrial (46.6); multifamily residential (44.0)
Project inquiries index: 52.4
Design contracts index: 47.3

Regional and sector categories are measured as three-month moving averages and may not align with the national score.

Inside Lighting strives to accurately report certain data on the day it is reported by the AIA, but updates to past data with new three-month rolling averages might not be made. For official and most current reports, refer to the AIA ABI numbers. All ABI data is sourced from the AIA.

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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)