Architecture Billings Index Rose to 47.2 in August

The AIA/Deltek Architecture Billings Index climbed to 47.2 in August, up from 46.6 in July, but remained firmly in contraction territory as architecture firms faced persistently soft business conditions, the American Institute of Architects reported on September 23 from Washington, DC.

Any ABI score below 50 signals declining billings. Although the share of firms reporting declining billings eased slightly from July, the overall trend remained downward, according to the AIA.

Inquiries into new projects showed only modest growth during the month, while the value of newly signed design contracts continued to decline. The project inquiries index scored 50.8, and the design contracts index scored 48.3.

Regional performance was mixed. Midwest firms reported modest growth for the first time in nearly a year, posting a regional score of 50.7. Billings at Western firms were essentially flat at 49.8. The South came in at 46.1. Northeast firms saw billings fall sharply to 40.7 — their lowest level since 2020.

Optimism is fading. The share of architecture firms expecting future billings to decline rose from 21% at the end of the first quarter to 29% by the end of the third quarter, the AIA reported.

Conditions in the broader economy also remained mixed. Architectural services employment increased, adding 700 new positions in July. Despite that employment growth, inflation ticked back up in August: the Consumer Price Index rose 0.4% from July, after increasing just 0.1% the previous month. The CPI remains up 3.4% from one year ago, with recent increases in gasoline and energy prices among the largest contributors.

"Architecture firms are caught between stubborn inflation and higher borrowing costs," said AIA chief economist Richard Branch. "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."

Sector indexes pointed to the same squeeze. Commercial/industrial work led at 50.4, followed by multifamily residential at 47.8 and institutional at 42.5-adjacent territory with a score of 47.0. Mixed practice firms — those without at least half of their billings in any one other category — posted the weakest score at 42.5.

With design contracts still contracting and nearly a third of firms bracing for further declines, the modest uptick in the headline index offers little evidence of a turnaround in the months ahead.