After a positive, but uneven, upward trend in the January 2022 Architecture Billings Index (ABI) report last month, the numbers for February 2022 released today by the AIA paint a similar picture.
The ABI continued to inch higher as the composite index measured 51.3 in February, slightly up from the 51.0 seen in January (anything over 50 for the composite index represents an increase from the month before, anything under a decrease). This marks yet another consecutive month of positive growth since February of 2021 as demand for architectural services flourished in the face of the pandemic, but it’s uncertain how long this bull market will continue. Ongoing supply chain issues and a contraction of regional demand in the West and Southeast could ultimately drag the ABI into negative territory at some point this year.
“Despite the continued healthy demand for design services, activity is plateauing as firms face a myriad of external challenges, from staffing to supply chain disruptions to high inflation and rising interest rates,” said AIA Chief Economist, Kermit Baker, in a press release. “While the rebound from the pandemic has positively impacted firms in most regions, the prolonged lack of demand for design services in the Northeast is of growing concern.”
Breaking down the composite figure, the measure between interest in new projects and signed contracts only widened. In February, the measure of inquiries into new projects grew from 61.9 in January to 62.5, indicating that demand from homeowners and developers is still strong. Although that’s the case, and actual signed design contracts grew to 55.2 in February from 56.1 in January, the pace isn’t as fast as it had been the month before.
On a region-by-region basis, the AIA pointed out that the February ABI figures marked the sixth straight month of a decrease in billings for the Northeast; the area saw billings fall to 44.3 in February, down even further from the 46.8 in January. The West was a similar story, charting 47.9 last month from 47.6 the month prior. The South remained the strongest performer, with billings measured at 58.6 in February, positive but not as hot as the 61.2 recorded in January. Finally, the Midwest increased slightly, coming in at 53.2 in February, up from a tepid 51.5 in January.
It’s a case of “more of the same” in the breakdown of billings at firm by practice type—offices specializing in institutional work, long thought a safe harbor during economic downtowns, continue to suffer. Billings contracted again 47.2 in February from 47.3 in January. The strongest performer crown went to firms with a mix of commercial and/or industrial projects on the boards, at 55.4 in February from 54.2 the month prior, likely a result of the loosening of COVID restrictions and the return of public foot traffic. Meanwhile, mixed-practice firms, previously the strongest performers, saw billings move down to 53.8 in February from a much stronger 60.6 in January. Finally, firms specializing in multi-family residential projects continued to see demand increase, but slower than last year’s boom, measuring 52.6 last month, a slight increase from the 50.1 figure seen in January.