For much of 2023 the Architecture Billings Index (ABI), the economic indicator report published monthly by the AIA, has been in constant fluctuation. It has teetered back and forth, reporting a decline in billings one month and an increase in the following month. In August, the ABI dropped below 50 to 48.1; any score below 50 signifies a drop in billings. This September, the score has dropped further reporting 44.8. According to the AIA, this is the lowest score since December 2020—the height of the pandemic.

“The September ABI score reflects a marked downturn in business conditions at architecture firms, with the sharpest decline observed since the peak of the pandemic,” said AIA Chief Economist Kermit Baker in a statement. “While more firms are reporting a decrease in billings, the report also shows the hesitance among clients to commit to new projects with a slump in newly signed design contracts.”

The hesitancy on the part of firms to sign on to new work is apparent, with the index for new design contracts reporting a score of 46.2. This is a decline from August’s 47.9. Similar to August, in September new project inquiries remained up, slowing only slightly, reporting a score of 53.7.

In its report for September the AIA also mentioned project backlogs at firms. In much of 2022 firms were reporting significant backlogs as the industry and economy began rebounding from the pandemic. The average backlog at firms has dropped to 6.5 months, according to the AIA’s report this is the lowest it’s been since the end of 2021.

In addition to reporting the national average, the AIA also releases individual billings index scores for the four regions of the country. In September the West again reported the lowest score, 44.3. In August the Northeast was the only region to report a score higher than 50.0, and in September it saw a significant drop to 46.4.

For several months now firms concentrating their work on institutional projects continued to report increases in billings. For September the billings score for this sector dropped to 50.1, an indication business conditions are slowing.

As we close out 2023—a year that saw rising interest rates, increased costs of products, the steadying of pandemic-induced supply chain disruptions, and wavering business conditions—the outlook appears to be quite bleak.