Following a breakout September in which the American Institute of Architects’ index of billings at design firms surged into positive territory, the numbers slipped back below the all-important 50 mark in October, confirming widespread evidence of a stop-start recovery.
The previous month’s increase had brought the AIA’s Architecture Billings Index to 50.4, surpassing 50 for the first time since January 2008, but those gains were all but wiped out in October as the index dropped nearly two points to 48.7. Meanwhile, inquiries dipped slightly from 62.3 in September—their highest point since mid-2007—to 61.7, offering continued signs of client life despite the index’s downward drift. (Any score above 50 indicates an increase in billings or inquiries, and below 50 a decrease.)
The October numbers were not unexpected by analysts who have tracked the industry’s arduous climb back from its nadir in January 2009, when the billings index hit a record low of 33.3. “This is disappointing news, but not altogether that surprising,” AIA Chief Economist Kermit Baker said in a November 17 release. “We were anticipating a slow recovery period, and it is likely that there will be some fits and starts before conditions show consistent improvement. Right now, reluctance from lending institutions to provide credit for construction projects and a sluggish economy are the main impediments to a revival of the design and construction industry.”
Regionally, the Northeast remained relatively strong, even as it slipped two points to 54.5, marking a third straight month above 50. The Midwest also showed resilience, rising nearly a point to 51.8 and logging its second consecutive month of positive growth. The South continued its climb out of the trough, rising modestly to 48.6. Only the long-suffering West declined in October, slipping two-tenths to 44.3.
Among the sectors, the survey also pointed to gradual improvement: Commercial and industrial work continued a streak of six straight months above 50, hitting 54.5 in October. Institutional work increased to 50.8 and multifamily residential was up to 49.1, while mixed practice ended the month down a point to 43.2.
The broad economic picture indicates that good times are still some way off, with the housing sector offering a particularly gloomy outlook. In October, private housing starts plunged nearly 12 percent over the previous month, according to the Commerce Department, hitting their lowest level in 18 months and signaling a tumble back into the trough for multifamily home construction. Meanwhile, the Federal Reserve has cited both “continued growth” and “widespread signs of a deceleration” in economic activity—mixed messages that point to more jittery months ahead.