The August Architecture Billings Index reports a continued increase in growth

Strong and Steady

The August Architecture Billings Index reports a continued increase in growth

(Heye Jensen/Unsplash)

It’s that time of the month again …. The Architecture Billings Index (ABI), a monthly report by the American Institute of Architects (AIA), has dropped for August and the numbers have spoken. Last month saw an increase in the score to 53.3 up from 51.0 in July—any score above 50 indicates an increase in billings from the prior month. This increase, according to the AIA, indicates that nationally business conditions at architecture firms have “remained generally strong.”

The last several ABIs have reported slower growth, a combination of the decelerating post-pandemic uptick coupled with nationwide inflation. These latest numbers indicate that growth will continue as it has, with new project inquiries and design contracts still on the rise at least through the next year or so.

“While a strengthening billings score is encouraging, the flat scoring across regions and sectors is indicative of a nationwide deceleration over the next several months, said AIA Chief Economist Kermit Baker. “A variety of economic storm clouds continue to gather, but since design activity continues to increase, we can expect at least another 9–12-month runway before building construction activity is negatively affected.”

August saw a strong increase in new project inquiries compared to the previous month, 57.9 and 56.1, respectively, and design contracts dipped slightly to 52.3 from 52.9.

While the national average ABI score increased, business conditions in the Northeast remain “softened” with a score of 49.8, up only slightly compared to July’s 48.4. In the South, conditions “held steady” and are again—for the second consecutive month—the strongest regionally coming in at 52.9 compared 53.6 last month.

As for specializations at firms, another regular metric of the ABI, all sectors, residential, commercial, and institutional reported an increase in billings, with the strongest growth in multifamily residential and institutional projects.

Each month, the AIA asks responding firms to answer a survey question related to their practice. For August, firms were asked if they are seeing an increase in demand for environmental enhancements or upgrades on projects. Fifty-five percent of the respondents said clients were “more willing to invest in improving energy efficiency in recent years.” Additionally, 37 percent reported clients were “somewhat or much more willing” to consider lifecycle costs in design projects. As for the types of projects in which clients were most interested in implementing environmental and energy efficient practices, government facilities topped the list at 32 percent, with education (28 percent) and commercial (14 percent) trailing behind.

August’s report also mentioned the Federal Reserve’s continued intent to raise interest rates, which increased again today another 0.75 percent with the promise of more hikes in the coming months. Despite the higher costs of products, continued supply chain issues, and declining housing prices and demand for commercial office space, all of which indicate the potential for an economic downturn, hiring for architecture services remains “strong.” Most recent data cited by the AIA reported 1,100 new positions added during the month of July.

While the outlook for the economic standing of the industry appears to be positive at this time, only time will tell what happens next.