The AIA’s Architecture Billings Index (ABI) for the month of May reported a decline in billings from April. It’s down to 42.4 from April’s 48.3—any number lower than 50 indicates a decline in billings.
The declining trend is no longer news at this point, as billings have decreased for the better part of the last year and half. AIA chief economist Kermit Baker commented the decline in his May report statement.
“The decline in the May ABI score continues a year and a half of weakness in design billings at U.S. architecture firms. However, firms only reported modest declines over the first half of this period,” said Baker. “Over the past nine months, volatility has increased, and scores have softened more significantly, with the May score the weakest reported since the end of the pandemic recession.”
Just as billings slowed quite considerably compared to the month of April, so did new project inquiries and design contracts. In May, the score for project inquires dropped from 54.8 in April to 52.1—still an increase but at a slowed rate.
In addition to reporting a national score, the ABI also provides a score for each region in the country. The Midwest again reported the lowest score, 41.7, while the highest reported was in the Northeast, 47.7.
As for the spending activity in building sectors, commercial/industrial, typically the strongest in terms of billings performance, remained on the lower end, with minimal improvement from April (47.4) to May (48.2). The score for multifamily residential, one the most sluggish in terms of billings recently, reported a relatively strong 47.3.
Economists and consumers have been steadily watching interest rates rise for months. In its most recent announcement, earlier this month, the Federal Reserve said interest rates would remain unchanged and a slash may not happen until December. In the meantime, architects and builders can expect project costs to remain on the higher end.
