While March saw the reversal of a five-month-long downward trend in the Architecture Billings Index (ABI), the score dipped in April. The industry report, put out each month by The American Institute of Architects (AIA), reported a billings score of 48.5 for April, a drop from the 50.4 reported in March; any score above 50 indicates an increase in firm billings.
Billings may have dropped, however, respondent firms reported new project inquiries are up again in a reversal of last month’s report, which saw a dip from February to March. A score that appears to be continuing to decline is the value of new design contracts, which came in at 49.8 for the month of April.
“The ongoing weakness in design activity at architecture firms reflects clients’ concerns regarding the economic outlook,” said AIA Chief Economist Kermit Baker in a press release. “High construction costs, extended project schedules, elevated interest rates, and growing difficulty in obtaining financing are all weighing on the construction market.”
Despite the decreases in billings and a grim economic outlook, the AIA also stated in its report that firms “are cautiously optimistic” for the remainder of the year. Adding that with construction costs lowering and “green building and energy efficiency initiatives” on the rise, there are plenty of opportunities to tap into.
Each month, in addition to the overall score, the ABI scores each region across the country, as well as building types. Similar to March, in April, the only region reporting a score higher than 50 was the Midwest, which saw a slight dip from 51.4 to 51.2. Both the South and the West reported small gains, but still remain at scores under 50 (48.7 and 49.3, respectively). In the East, the score continues a decline, dropping from 49.1 in March to 47.2 in April.
As for the sectors, firms not specializing on a singular building type have again reported an increase in billings, although this has slowed compared to previous months, from 53.9 in March to 52.1 in April. In February, billings from mixed practice firms logged a steady score of 57.0. Both commercial/industrial and institutional saw gains, bringing their respective scores to just over the magic number of 50 at 51.8 and 50.6. The sector that continues to drop is multifamily residential, which was 44.2 in March and declined to 41.5 in April.
While the ABI has been a moving target trends have emerged amid the regional banking crisis and slowing inflation rates year-on-year. As questions of stability in the commercial real estate market continue to be present, and energy commodity prices continue to fall, AN will circle back again with next month’s billings index.