Architectural Firms Report Softened Business Conditions in April

Despite a decrease in architecture billings in April, firms remain optimistic about future projects in 2023 and beyond, reports the American Institute of Architects (AIA). Their optimism stems from an expected project slowdown in construction projects, which should alleviate some costs, the AIA states in its monthly Architectural Billings Index (ABI).

Despite a decrease in architecture billings in April, firms remain optimistic about future projects in 2023 and beyond. Photo courtesy of Lance Anderson.

April’s ABI fell from 50.4 in March to 48.5 in April. Firms reported that inquiries into new projects accelerated slightly to 53.9, while most firms reported a decline in the value of new design contracts (49.8).

The ABI is a leading economic indicator that leads nonresidential construction activity by approximately 9-12 months. Any score below 50 indicates a decline in billings.

“The ongoing weakness in design activity at architecture firms reflects clients’ concerns regarding the economic outlook,” says AIA chief economist Kermit Baker. “High construction costs, extended project schedules, elevated interest rates and growing difficulty in obtaining financing are all weighing on the construction market.”

Regionally, all but one sector scored under the 50 threshold. The Midwest scored 51.2, the West scored 49.3, the South scored 48.7 and the Northeast scored 47.2.

AIA officials state that while billings have decreased, firms remain optimistic about 2023. Less demand for construction projects will, in turn, lower costs and ease schedule constraints, which will ease the financial burden on some projects. Many firms will also capitalize on green energy projects, add officials.