Business conditions at architecture firms weakened further in May. The American Institute of Architects (AIA)/Deltek Architecture Billings Index® (ABI) declined to its lowest level since January, with a score of 44.5.
While growth appeared to be approaching earlier this year, the current economic certainty has contributed to business conditions softening across all regions. Billings remained closest to growth at firms located in the South, following the trend for most of the year thus far. Firms of all specializations also reported declining billings this month, after firms with a multifamily residential specialization saw flat to modestly increasing billings in March and April.
In addition, the inquiries index fell below 50 for the first time in four months. The value of newly signed design contracts also weakened to its lowest level since January.
“The uncertainty created by the Iran conflict, and substantially higher energy costs, weighed on architect billings in May”, said Richard Branch, chief economist for AIA. “Higher interest rates, rapidly rising material costs, and continued labor shortages all contributed to softer demand.”
Key ABI highlights for May include:
- Regional averages: South (49.6); Northeast (46.2); West (45.4); Midwest (45.3);
- Sector index breakdown: multifamily residential (49.2); institutional (46.9); commercial/industrial (45.5); mixed practice (firms that do not have at least half of their billings in any one other category) (44.1)
- Project inquiries index: 49.4
- Design contracts index: 45.0