It seems that the recent declines in architectural billings, as measured by the AIA’s Architecture Billings Index (ABI), are starting to become a trend. While both October and November 2022 saw a dip in the score to 47.7 and 46.6 respectively (any score below 50 indicates a drop in billing). Today, the trade body’s monthly report for December also reported a dip in the score, coming in at 47.5 for the last month of the year, showing a drop that was slightly improved from the November reading.
“Despite strong revenue growth last year, architectural firms have modest expectations regarding business conditions for the year ahead,” said AIA Chief Economist Kermit Baker. “With ABI scores for all of the fourth quarter of 2022 in negative territory, a slowdown in construction activity is expected later this year, though the depth of the downturn remains unclear.”
In the month of December, inquiries into new projects saw an uptick, indicated in the report with a score of 52.3, but survey data collected by responding companies reported a decline in new design contracts, indicated with a score of 49.4, suggesting that there is there is interest in new projects, but they are not accepted yet. This data comes from 20 months of strong growth as both the architecture and construction industries roared with months of pandemic lull and supply chain issues.
In addition to reporting a national score, the AIA’s report is broken down monthly by region. In November, the Northeast reported the largest drop in bills of all four regions with a low score of 42.4. In December, the score rose to 46.5 in particular, but still remains below 50. The region that reported the lowest number of invoices in December was the West with a score of 45.5.
While November saw an increase in bills in the South with a score of 50.5, this score predictably took a turn in December’s report, coming in at 48.6. In the Midwest, the billing index rose slightly to 49.4 from 47.6 in November.
As with regional indicators, the sectoral breakdown also saw declines in the ABI score, with multi-family housing scoring lowest at 44.3. Institutional and commercial/industrial sectors reported strong scores for much of 2022, but fell sharply in the last quarter of the year with scores of 47.3 and 45.2 respectively. The only sector to see gains in invoices was mixed practice, which reported a strong score of 54.8.
With 2022 – a year of relatively strong economic growth, despite increasing inflation – behind us, as Baker said, it remains to be seen how architects will fare in 2023.
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