After five months of a downward trend the Architecture Billings Index (ABI), has reported an increase for the month of March. The industry report, put out each month by The American Institute of Architects (AIA), reported the billings score for March is 50.4, up from 48.0 in February; any score above 50 indicates an increase in firm billings.
While billings are up compared to the previous month, the number of new project inquiries reported by surveyed firms has dropped from 51.3 in February to 48.9 in March. In its report, the AIA suggested that this decline “likely reflects ongoing concern among clients about committing to new projects due to lingering uncertainty about interest rates and inflation.”
Adding to the ongoing concerns over rising interest rates and inflation was the seemingly abrupt collapse of several banks in March that led to an economic scramble. AIA Chief Economist Kermit Baker noted this in his statement for the March report: “In spite of the positive movement in architecture firm billings in March, core concerns remain. Inflation still needs to ease further for interest rates to return to more normal levels, and the banking turmoil still threatens to hold back residential and commercial construction loans.”
Each month the ABI report provides individual scores for geographic regions across the country. In March the Midwest was the only region reporting a score higher than 50, with a steady 51.4. The South, which reported the largest decline in February, came in with a slight increase this March up to 47.4 from 47.3 last month, as did the score for the East. The score for the West was notably down with an average of 47.2 compared to 50.4 last month.
In addition to regional scores the ABI also reports on billings for sector specializations. As in previous months, firms operating a mixed practice, not specializing in one building type, reported the highest billings score—53.9. This is down compared to last month, when the score was a strong 57.0. Institutional and commercial/industrial reported slight increases compared to the previous month, but remained under 50, while multifamily residential reported a decline to 44.2 from 46.2 last month.
Each month the AIA asks respondent firms a special question. This month it inquired about the level of priority that firm’s clients seem to place on the AIA’s Framework for Design Excellence, which includes values and goals related to health, resilience, equity, and zero carbon. 63 percent of responding firms reported that clients placed a high priority on health-related issues in the last year, and 60 percent of respondents said zero carbon was not a priority for clients.
On May 4 at 2 p.m. ET Kermit Baker will provide a quarterly update on the architecture industry using the latest economic data.
