What goes down must come up? Those who have been following the AIA’s Architecture Billings Index (ABI) for the last year and half are well aware of its continued decline. September and October 2023 saw the lowest scores since peak pandemic—any number below 50 indicates a drop in billings from the previous period.
For the month of July the rate of decline in billings at architecture firms appears to have slowed again, which is encouraging news. The AIA reported a score of 48.2 for July and appears to be cautiously optimistic amid uncertain economic conditions more broadly.
“While the ABI score of 48.2 indicates that fewer firms reported declines in billings compared to June, over half of the responding firms continue to navigate challenging business conditions,” the organization shared in its monthly report.
In his statement, AIA chief economist Kermit Baker again looked toward a future with lower interest rates. He also noted another “uptick” in the new project inquiries at respondent firms. He offered that this could indicate tabled projects may surface again soon. Inquiries into new work have continued to grow all year, despite declining billings and a waning value of design contracts.
The report also breaks down the ABI score regionally. Again, the Northeast has come out on top, marking the “first two-month period with a score at or above 50 for the region since mid-2022.” In June, the region reported 52.2, in July this dropped slightly to 50. For July, all other regions reported a decline in billings with the most significant drop in July coming out of the West, 46.
In July, firms working on projects in the institutional sector saw what could be a promising increase. The sector reported a slowing decline in billings compared to the others—commercial/industrial, residential, mixed—with a score of 49.1.
In addition to the ABI, the AIA also shared survey information on conditions or factors architecture firms have found to be slowing projects down; the polling overwhelmingly indicated permitting, zoning, and environmental restrictions are increasing design and construction timelines. What speeds projects up? Client urgency.
