The June 2022 Architecture Billings Index reports “modest” growth
After strong growth in the spring, the Architecture Billings Index (ABI), reported monthly by the American Institute of Architects (AIA), has dipped slightly to 53.2, down from 53.5 in May—any score above 50 indicates an increase in billings from the prior month. In its latest report the AIA stated the “pace has returned to more modest territory.”
The data, collected from responding firms, shows that while new project inquiries grew in June, the rate of growth is the “slowest” since the post-pandemic recovery began at the start of 2021. The value of new signed design contracts also dipped to a lower growth rate from 56.9 in May to 52.2 in June.
Regionally, billings in the Northeast decreased following two months of steady growth. In the South, business conditions also slowed, with the most robust growth coming from firms in the West and Midwest. Sector-wise, firms with a focus on institutional projects experienced their greatest post-pandemic increase to date; similarly, multifamily residential and commercial/industrial specializations also reported increased growth.
Project backlogs at firms were considerable during the first quarter of 2022, citing an average of 7.2 months. That timeline has dropped to 7.0 months this quarter, which as reported by the AIA signifies firms still have a “robust” reserve of projects to work on.
It isn’t all blue skies and rainbows, however. Higher interest rates—upped in June and likely slated for another hike at the end of July—and on-going deficits in the shipping and production of building and construction materials, continue to loom over the industry. In the June ABI report the AIA relayed that inflation remains a “key concern.” It cited the Consumer Price Index (CBI), which increased by 1.3 percent in the last month, and is up 9.1 percent compared to last year. While the nationwide unemployment rate has fully recovered from its pandemic-era increase, architecture employment has reported a decline. Reported job loss and a drop in new projects potentially warn of dark times to come.
“Ongoing project activity at architecture firms as well as new work coming online remains strong, pushing project backlogs up to seven months on average nationally,” said AIA Chief Economist, Kermit Baker. “In spite of heavy workloads, employment at architecture firms has stabilized, suggesting that adding new employees is becoming even more challenging as the building construction sector continues to recover.”
Tune in again next month to see how the economic state of the architecture industry fares, given inflation, rising costs, and a looming recession.
