After the American Institute of Architects (AIA) released their Architecture Billings Index (ABI) figures for June 2020, it seemed like the design sector was approaching a doom-and-gloom plateau. Although figures were still negative, they were trending in such a way as to suggest that maybe the worst was over; now, in the newly-released July ABI, it seems there’s still a ways to go before demand and billing trend positive again.
In June, the ABI (the composite number reflecting regional averages, design demand by sector, project inquiries, and existing design contracts; anything over 50 represents a month-over-month increase, anything under, a decrease) was at 40.0, indicating another decline. It seemed that things might be improving, but July’s ABI was also 40, representing yet another modest decline for the fourth month in a row.
Breaking last month’s Architecture Billings Index down by components, inquiries into new projects only slid from 49.3 to 49.1 in July, representing a slight month-over-month dip. Newly signed design contracts, however, took a tumble, falling from 44.0 in June to 41.7.
It appears that clients are interested, but still cautious about where to place their money, given the ongoing coronavirus pandemic and associated recession we find ourselves in. By project type, the mix didn’t change that much from June. Multifamily residential project demand put up the strongest figures (as one would expect, given the ubiquitous need for housing), moving from 44.7 in June to 47.5 in July. Firms working on a mix of project types saw demand flatten out from a decline of 35.3 in June to 44.0 in July. Demand for Institutional work remained surprisingly low, only rising from 38.9 in June to 39.5 in July. Commercial and industrial projects were once again hit the hardest, as demand declined again, going from 30.1 in June to an only slightly better 35.4 in July.
Regionally, things didn’t fare much better. In the West, demand “rose” from 36.8 in June to 40.9 in July; the Midwest saw comparable slides, moving from 36.8 in June to 40.1; in the South, demand moved from 35.9 in June to 40.7 last month. The Northeast saw the largest decline by region, stubbornly only moving from 34.2 in June to 36.8 last month.
“It’s clear the pandemic continued to contribute to uncertainty in business conditions, especially as cases spiked in states across the country,” wrote AIA Chief Economist Kermit Baker, in the ABI breakdown. “While clients expressed interest in exploring new projects, many are hesitant to sign onto new contracts with the exception of the multifamily residential sector, which came close to seeing billings growth in July.”