Soft Business Conditions Persist at Architecture Firms

Any score below 50 indicates a billings decline, although this month’s score indicates that somewhat fewer firms reported a decline in billings in May than in April.

Inquiries into new work increased this month for the first time since January, reflecting the modest degree of stabilization in the economy recently. However, the value of signed design contracts continued to decline, indicating that while clients are starting to explore new projects, they remain hesitant to sign a contract committing to them.

“Business conditions remained sluggish nationwide in May, with nonresidential construction activity continuing to decline in several major metro areas,” said Kermit Baker, PhD, AIA Chief Economist. “Firms across all specializations reported declining billings this month. However, the pace of decline slowed at firms specializing in multifamily residential projects. These, along with institutional work, are likely to be the first to return to growth when conditions begin to improve.”

Key ABI highlights for May include:

• Regional averages: South (49.2); West (44.3); Northeast (43.6); Midwest (43.5)
• Sector index breakdown: institutional (46.2); multifamily residential (46.1); mixed practice (firms that do not have at least half of their billings in any one other category) (45.4); commercial/industrial (43.8); 
• Project inquiries index: 51.4
• Design contracts index: 45.9

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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