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The September Architecture Billings Index rises once again, overcoming skepticism

Rise And Shine

The September Architecture Billings Index rises once again, overcoming skepticism

(C Dustin/Unsplash)

The AIA released its latest September Architecture Billings Index (ABI) score on October 20, and once again, the composite index rose despite fears of a material and labor shortage-induced slowdown.

In September, the three-month composite index that is the ABI rose to 56.6, gaining slightly over the 55.6 figure in August (anything over 50 represents a gain from the month prior, anything under 50 a decline).

“The ABI scores over the last eight months continue to be among the highest ever seen in the immediate post-recession periods that have been captured throughout the index’s history,” said AIA chief economist, Kermit Baker, in a press release. “However, it’s unlikely that revenue increases at architecture firms can sustain this pace. Given that growth in both new design contracts and project inquiries have moderated in recent months, we expect to see a similar path for the ABI.”

While the overall index was up over August, that growth wasn’t spread equally across all of the ABI’s individual components. New project inquiries remained the strongest performing metric at 61.8, indicating that there still is room to grow in the future, but that’s a slight cooling from the 64.7 presented in August. Newly signed design contracts also fell slightly, from 56.6 in August to 54.7 in September; again, technically an increase from the month before, but it appears that enthusiasm for actually putting pen to paper and signing on to build isn’t following the high level of interest.

On a regional basis, performance remained on about the same upward trajectory set in August. The Midwest moved up to the top spot, coming in at 57.7 in September from 55.2; surprisingly, the South moved up to second with 57.0 from 52.5 the month before. The West slid to third from 57.0 in August to 56.0 in September, and the Northeast remained in dead last at 51.5, falling slightly from 51.7 in August. The Northeast has, over the entirety of the pandemic, remained the worst performing region, something that seems unlikely to change given the only gradual month-over-month growth shown.

On a sector-by-sector basis, demand for mixed-practice firms tackling a variety of projects remained in first place at 58.8, up even more from the 56.0 presented in August. Firms specializing in commercial and/or industrial work also saw strong growth, rising to 58.1 in September from 54.7—as the vaccination rate rises and more and more retail and employees return to work, it’s likely that this specialization especially will retain its strong performance. Meanwhile, despite a fall in housing starts due to high material costs and pipeline supply issues, multi-family residential demand increased from 54.3 to 56.1 in September. Firms doing institutional work slid to the bottom of the list in September, charting 53.5, down from 54.4 the month prior.

This month’s special survey question by the AIA to its members was all about technology, and the results were actually about what was expected. Larger firms saw the biggest investments in high-end technology, and a full 68 percent of the businesses surveyed reported that they had invested in team and project management solutions, which often paid dividends.

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