The rapid recovery seen two months ago in the AIA Architecture Billings Index appears to be stagnating, according to the May numbers released today. After shooting up from a near-record low of 35.3 in February, billings hit 43.7 in March, and have remained close to that mark since, with May billings totaling 42.9.
Though well above the historic low of 33.3 that the index hit in January, billings are also well below their break-even index of 50, at which point firms’ payments are increasing instead of decreasing. For the time being, this means payments continue to decline, now for the 16th straight month. And with much of the stimulus spending already underway—it was credited for the jump earlier this year—there appears to be little economic activity to further buoy the industry out of the current decline.
To make matters worse, one of the few bright spots, a recent uptick in inquiries, might actually be signaling not renewed interest in work but more competition for what little is available. “The design and construction marketplace is extremely competitive right now,” Kermit Baker, the AIA’s chief economist, said in a release. “Prospective clients are casting a wider net causing numerous firms to bid for the same project, which is why the high level of inquiries is not necessarily translating into additional billings for project work at many firms." Inquiries were 55.2 for May, down from 56.8 in April and 56.6 in March.
Regionally, the outlook is not much better, with the South (41.3 in May) and Midwest (41.5) holding in the low 40s while the West (39.4) continues to languish in the high 30s. Surprisingly, the Northeast, which fell the furthest of any region, hitting 29.8 in January, has also posted the strongest recovery, reaching 48.3 in May. Yet it, too, has seen its rise slow, and until it breaks 50, complete recovery cannot be claimed.
In a similar surprise, both housing (45.5) and commercial/industrial (43.1) sectors have seen the strongest growth, though that is also partly because they fell so far in the previous year. Mixed-use work (44.5) remains relatively strong, as it has held in the mid-40s since January 2008, though it has dipped below that point at times, and still remains in overall decline. The worst performing sector, and contrary to architectural spending in previous recessions, has been the institutional sector, which has dipped back down to 38.0 after a more recent rally. Part of the reason for this could be the petering out of stimulus spending.