AIA Billings Index Hits 47.2 in August as Slump Nears Four Years
The AIA/Deltek ABI rose slightly to 47.2 in August, but business conditions have now stayed negative for nearly four years — the longest slump since the index began in 1995.
- Section
- Architecture
- Author
- By Elena Vasquez
- Filed
- Length
- 2 min read
Key takeaways
- The AIA/Deltek ABI scored 47.2 in August, up from 46.6 in July but still below the 50 contraction threshold.
- Business conditions have been negative for almost four years, the longest slump in the index's history since 1995.
- The Midwest was the only region in expansion at 50.7; the Northeast was weakest at 40.7 for the third straight month.
The AIA/Deltek Architecture Billings Index® registered 47.2 in August, up marginally from 46.6 in July but still firmly in contraction territory. Any score below 50 signals declining billings at U.S. architecture firms.
The gain offered little comfort. The AIA reported that "the share of firms reporting declining billings eased slightly from July, the overall trend remained downward."
Business conditions have now stayed negative for almost four years — the longest slump in the ABI's history, which the index has tracked since 1995.
AIA chief economist Richard Branch pinned the blame on a squeeze between costs and credit. "Architecture firms are caught between stubborn inflation and higher borrowing costs," Branch said in a statement.
He warned that monetary policy may deepen the pain before it relieves it. "The Federal Reserve's latest rate increase may help ease inflationary pressures over time, but in the near term it adds another headwind for projects already facing a difficult financing environment," Branch added.
The regional picture diverged sharply. The Midwest fared best, posting a regional average of 50.7 — the only region in expansion. The West came in at 49.8, the South at 46.1, and the Northeast at 40.7. The Northeast recorded the weakest conditions for the third straight month.
Sector results told a similar story of uneven weakness. Firms specializing in commercial and industrial work scored 50.4, the strongest category. Multifamily residential posted 47.8, institutional work 47.0, and mixed practice firms trailed at 42.5.
Forward indicators offered mixed signals. The project inquiries index reached 50.8, suggesting clients are still exploring work. The design contracts index sat at 48.3, meaning signed agreements have yet to follow.
High interest rates and the conflict in Iran continue to take a toll on the profession, according to the AIA. With the Federal Reserve signaling more tightening ahead, firms face the prospect that the financing environment — the binding constraint on new projects — gets worse before it gets better.
Source: The Architect's Newspaper
