Architecture Business Conditions Continue Downward Trend

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For the third consecutive month, every building category and every region shows a drop in billings

THE MOST RECENT REPORT: June 26, 2024

WASHINGTON – June 26, 2024 – The AIA/Deltek Architecture Billings Index (ABI) score declined to 42.4 in May, as more firms reported a decrease in billings than the month prior.

"The decline in the May ABI score continues a year and a half of weakness in design billings at U.S. architecture firms. However, firms only reported modest declines over the first half of this period,” said Kermit Baker, PhD, AIA Chief Economist. “Over the past nine months, volatility has increased, and scores have softened more significantly, with the May score the weakest reported since the end of the pandemic recession."

The pipeline of new work coming into firms is showing increasing softness. While inquiries into new projects continue to increase, they did so at a slower pace than in recent months. Additionally, architecture firm billings remained soft across all regions and sectors in May. Billings declined at firms in all regions of the country for the fourth consecutive month, as conditions remained weakest at firms located in the Midwest.

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 May include:

  • Regional averages: Northeast (47.7); Midwest (41.7); South (46.0); West (46.3)

  • Sector index breakdown: commercial/industrial (48.2); institutional (43.2); mixed practice (firms that do not have at least half of their billings in any one other category) (42.8); multifamily residential (47.3)

  • Project inquiries index: 52.1

  • Design contracts index: 45.6

 

The ABI score is a leading economic indicator of construction activity, offering a nine-to-twelve-month forecast of nonresidential construction spending. The score is calculated from a monthly survey of architecture firms that tracks the change in billings from the previous month.

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)

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)

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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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