Following months of decline, there are tentative signs of a rebound in the architecture industry, according to the latest AIA/Deltek Architecture Billings Index (ABI). While February saw a continuation of the downturn with an ABI score of 49.5, it was the smallest decrease recorded since July 2023, indicating that the sector's recent slowdown may be receding.
Kermit Baker, Ph.D., Chief Economist at the AIA, noted that there is a potential for recovery in the horizon. "“There are indicators this month that business conditions at firms may finally begin to pick up in the coming months. Inquiries into new projects grew at their fastest pace since November, and the value of newly signed design contracts increased at their fastest pace since last summer,” Baker stated. He also pointed out that with inflation in construction costs easing and the potential for lower interest rates, there are "positive signs for future growth."
The Midwest stood out as a beacon of resilience, continuing to register growth in billings for three consecutive months, despite business conditions remaining weak across the country in February. Firms located in the Midwest reported growth for the last three months, and for four of the last five months.
The ABI score is a leading economic indicator of construction activity, providing an approximately nine-to-twelve-month glimpse into the future of nonresidential construction spending activity. The score is derived from a monthly survey of architecture firms that measures the change in the number of services provided to clients.
Key ABI highlights for February include:
· Regional averages: Northeast (44.0); Midwest (50.8); South (47.7); West (47.2)
· Sector index breakdown: commercial/industrial (46.1); institutional (50.7); mixed practice (firms that do not have at least half of their billings in any one other category) (47.1); multifamily residential (44.9)
· Project inquiries index: 56.0
· Design contracts index: 51.1
The regional and sector categories are calculated as three-month moving averages and may not always average out to the national score.
Visit AIA’s website for detailed information about this, and past billing index reports.
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