AIA: Architecture firms see conditions worsening

“Unfortunately, business conditions remain relatively weak at architecture firms,” said AIA chief economist Kermit Baker. He noted that project backlogs were down during the quarter, with the greatest cut coming from “firms with an institutional specialization.”

The ABI is a leading indicator of nonresidential construction activity, projecting business conditions approximately 9-12 months in the future (the typical lag between architecture billings and construction spending). Readings above 50 indicate an increase in architecture billings, while those below indicate a decline.

Subindex trends

The new project inquiries index slipped to a five-month low of 50.1 in September, though it continues to indicate growth. The design contracts index remained in contraction for the 16th straight month at 46.3, and just marginally above the lows seen earlier this year.

Just one of the four regional indices (Midwest) ticked higher from August to September, though all stayed below the 50 threshold (Figure 2, left). The Midwest region nearly returned to growth territory, rising to 49.8.

A similar trend was seen in the sub-sector indices, with just one recovering from August (all but mixed were down), though all were in contraction. Commercial/industrial saw the sharpest downgrade, falling more than four points to a four-month low (Figure 2, right). Recall that in March the residential, commercial/industrial, and institutional sectors were at some of the lowest levels witnessed across the past five years. Current readings are nearly level with that period.

An interactive history of the September Architecture Billings Index is available here on our website.