Architecture and design-related firms reported their 19th consecutive month of declining billings in August, according to the latest American Institute of Architects/Deltek Architecture Billings Billings Index. However, the AIA says the new and expected interest rate cuts may help the ABI regain momentum.
The score of 45.7 in August was a drop from 48.2 the previous month, indicating a larger decline. A score of 50 represents no change from the previous month, while a score above 50 would represent an increase in turnover, and a score below 50 reflects a decline.
AIA and software firm Deltek released the latest ABI on the same day the Federal Reserve announced it would cut interest rates by half a percentage point, the first cut since March 2020.
“Unfortunately, even the looming interest rate cuts did not move the needle on project inquiries or new design contracts at architecture firms,” said Kermit Baker, AIA Chief Economist , in a statement. “Hopefully, once the path of further cuts is clarified, backlogged projects will be restarted and new projects will gain momentum.”
The AIA surveys its member companies each month to determine the ABI based on the companies’ turnovers. Respondents were split on how they expect business conditions to fare in the second half of the year, with 34% expecting an increase in revenue, 33% expecting a decrease and 33% expecting it to remain roughly flat.
The ABI serves as an indicator of non-residential construction nine to 12 months after design billing, according to the AIA.
Regionally, all parts of the United States saw billing declines in August, according to AIA. The Northeast fell to a three-month average of 48.2 in August after two months of flat billing. The South averaged 46.8, the Midwest 46.6 and the West 45.7.
By sector, companies specializing in institutional work have experienced the smallest decline, with a three-month average score of 47.4. Commercial/industrial companies were at 46.6 and multi-family residential at 44.0.
