The American Institute of Architects monthly Architecture Billings Index posted at 51.0 in May, expanding 2.5 points from April's score of 48.5 and rising back above 50.0. The ABI is a leading economic indicator of construction activity in the U.S. and reflects a nine- to 12-month lead time between architecture billings and construction spending nationally, regionally, and by project type. A score above 50 represents an increase in billings from the previous month, while a score below 50 represents a contraction.
"The May report highlights what we know in the broader economy as well—some sectors continue to outperform while others are struggling," says Ali Wolf, the chief economist of ARCHITECT's parent company, Zonda. "The multifamily space is a good example. Higher interest rates combined with expensive building costs but slowing rent growth are limiting the development of new multifamily projects. The lower volume levels are impacting architects in the space by extension."
The scores for project inquiries and design contracts strengthened in May. New project inquiries clocked in at 57.2, rising 3.3 points from April's score of 53.9. Design contracts posted a score of 52.3, increasing 2.5 points from April's score of 49.8.
“The modest improvement in overall demand for architectural services that we saw last month is encouraging news,” said AIA chief economist Kermit Baker, Hon. AIA, in a press release from the organization. “However, there continues to be variation in the performance of firms by regional location and building specialization. This suggests that overall business conditions for the profession likely will continue to be variable.”
The month-to-month changes in scores for regional billings—which, unlike the national score, are calculated as three-month moving averages—largely contracted in May, with one score remaining above 50.0. Billings in the Midwest fell 1.6 points to a score of 49.6, while billings in the West also fell 1.6 points to a score of 47.7. Billings in the South rose 3.6 points to a score of 52.3, and billings in the Northeast increased 1.5 points to a score of 48.7.
May's sector billings scores expanded slightly. The commercial/industrial sector fell 4.3 points to a score of 47.5; the institutional sector increased 2.8 points to a score of 53.4. The multifamily residential score increased 1.5 points to a score of 43.0, and the mixed practice sector rose 0.6 point to a score of 52.7. Like the regional billings scores, sector billings scores are also calculated as three-month moving averages.
This post has been updated with commentary from Ali Wolf.