ABI Reports Moderation in the Slowdown in Business Conditions at Architecture Firms

THE MOST RECENT REPORT: March 20, 2024

 

WASHINGTON –  Architecture firm billings continued to decline in February, with an AIA/Deltek Architecture Billings Index (ABI) score of 49.5 for the month. However, February’s score marks the most modest easing in billings since July 2023 and suggests that the recent slowdown may be receding.

“There are indicators this month that business conditions at firms may finally begin to pick up in the coming months. Inquiries into new projects grew at their fastest pace since November, and the value of newly signed design contracts increased at their fastest pace since last summer,” said Kermit Baker, PhD, AIA Chief Economist." Given the moderation of inflation for construction costs and prospects for lower interest rates in the coming months, there are positive signs for future growth.”

The Midwest as a region is still reporting billings growth, despite business conditions remaining weak across the country in February. Firms located in the Midwest reported growth for the last three months, and for four of the last five months.

aia-340598.pngThe 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 February include:

  • Regional averages: Northeast (44.0); Midwest (50.8); South (47.7); West (47.2)
  • Sector index breakdown: commercial/industrial (46.1); institutional (50.7); mixed practice (firms that do not have at least half of their billings in any one other category) (47.1); multifamily residential (44.9)
  • Project inquiries index: 56.0
  • Design contracts index: 51.1

 

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 billings from the previous month.

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

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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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