Economics
ABI Declines Continue, But Interest Rate Cuts Offer Hope for Rise
The AIA/Deltek Architecture Billings Index has now shown 19 consecutive months of declining billings for member architecture firms surveyed.
Chartcourtesy of American Institute of Architects
Architecture and design-related firms reported their 19th consecutive month of declining billings in August, according to the latest American Institute of Architects/Deltek Architecture Billings Index. However, the AIA says new and anticipated interest rate cuts may be able to help the ABI recover momentum.
The score of 45.7 in August was a drop from 48.2 the month before, indicating a greater decline. A score of 50 represents no change from the previous month, while a score above 50 would represent an increase in billings, and a score below 50 reflects a decline.
AIA and software company Deltek released the latest ABI the same day the Federal Reserve announced it would cut interest rates by a half percentage point, the first cut since March 2020.
“Unfortunately, even the impending interest rate cuts didn’t move the needle on project inquiries or new design contracts at architecture firms,” said Kermit Baker, AIA chief economist, in a statement. “Hopefully, once the trajectory of further cuts gets clarified, delayed projects will restart, and new projects will gather momentum.”
AIA surveys its member firms each month to determine the ABI based on the firms’ billings. Respondents were split on how they expect business conditions to go in the second half of the year, with 34% anticipating increased revenue, 33% expecting a decrease and 33% projecting it to remain about flat.
The ABI serves as an indicator of nonresidential construction between nine and 12 months following design billings, according to AIA.
Regionally, all parts of the U.S. saw billing declines in August, according to AIA. The Northeast dropped to a three-month average of 48.2 in August following two months of stable billings. The South averaged 46.8, the Midwest 46.6 and the West 45.7.
By sector, firms specializing in institutional work saw the least decline, with a three-month average score of 47.4. Commercial/industrial firms sat at 46.6 and multifamily residential at 44.0.
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