As predicted and probably presumed at this point, the final Architecture Billings Index figures (ABI) of 2020, released by the AIA today, painted a dour picture. The December 2020 ABI is in, and the numbers are even worse than those in November.
In December 2020, the ABI slid from 46.3 in November to an even worse 42.6. While anything under 50 represents a decrease in design demand from the month before (and over, an increase), the further drop is a bad omen for those hoping for a speedy economic rebound.
“Since the national economic recovery appears to have stalled, architecture firms are entering 2021 facing a continued sluggish design market,” wrote AIA Chief Economist Kermit Baker, Hon. AIA. “However, the recently passed federal stimulus funding should help shore up the economy in the short-term, and hopefully by later this year there should be relief as COVID vaccinations become more widespread. Recent project inquiries from prospective and former clients have been positive, suggesting that new work may begin picking up as we move into the spring and summer months.”
The individual figures, by sector and region, back up Baker’s assertion that things are stalled but looking potentially better—new project inquiries clocked in at 52.4 in December, the only positive index.
The newly signed contracts index continued to dip, falling from 48.6 in November to 48.5 in December, a second month of decline from a measure that had been trending positive in October.
Region-by-region, the downturn continued. Design demand in the South only changed a smidgen, going from 46.7 to 46.8 in December; the Midwest, which was previously growing in November at 50.1, dropped precipitously to 43.6; in the West, which had been similarly trending negative in recent months, the ABI dropped from 48.3 to 43.4 in December, and the Northeast continued to suffer worst of all, moving from 38.7 to 38.8 in December, a second consecutive month of massive demand drop-off.
On a project typology basis, demand for everything declined. Even multifamily residential demand, which had been the only project type to continually trend positive in past months, slipped to 46.1 in December from 52.2 in November. Meanwhile, demand for firms with mixed practice portfolios fell from 49.5 in November to 48.0, commercial/industrial dropped from 47.5 to 47.2, and institutional demand continued to get clobbered as it moved from 41.9 in November to 38.5 in December.
Will mass vaccinations and the promise of federal funding beef up January’s design demand, as the AIA expects? Only the next Architecture Billings Index figures will tell.