The Architecture Billings Index (ABI) ticked down in June, continuing a nearly three-and-a-half-year slump in business conditions.
The American Institute of Architects (AIA) reports that while the ABI score for July was 46.6 (falling from June’s reading of 47.3), clients remained interested in new construction, as inquiries for new projects rose in July. However, the value of newly signed design contracts fell further after coming close to growth the previous month.
“Macroeconomic uncertainty continues to weigh on the built environment,” says AIA chief economist Richard Branch. “High oil prices are putting upward pressure on inflation and may lead to even higher rates in the back half of the year. This will put additional pressure on developers and may lead to a further weakening in billings.”
AIA reports that business conditions remained soft at architecture firms in all four regions of the country in July. Companies in the Northeast reported the weakest conditions for the second straight month. The three other regions saw the pace of decline ease slightly.
Billings also fell across every specialization. Businesses with multifamily residential and institutional specializations posted slight growth earlier this year but have since seen conditions soften. Firms with a commercial and industrial specialization have not reported a rise in billings since July four years ago.
Key ABI July Highlights
- Sector index breakdown: Multifamily residential (48.4); institutional (47.4); commercial/industrial (46.7); mixed practice (firms that do not have at least half of their billings in any one other category) (43.2).
- Project inquiries index: 52.6
- Design contracts index: 47.2