It looks like the recent declines in architectural billings as measured by the AIA’s Architecture Billings Index (ABI) are shaping up to be a trend. While both October and November 2022 saw a dip in the score to 47.7 and 46.6, respectively (any score under 50 indicates a decline in billings). Today, the monthly report released by the professional organization for December, also reported a dip in the score, which came in at 47.5 for the final month of the year, showing a rate of decline that had slightly improved from its November measurement.
“Despite strong revenue growth last year, architecture firms have modest expectations regarding business conditions this coming year,” said AIA Chief Economist Kermit Baker. “With ABI scores for the entire 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, however, survey data compiled from responding firms reported a decline in new design contracts, indicated by a score of 49.4, suggesting there is interest in new projects, but they aren’t yet being taken on. This data comes off of a strong 20 months of growth as both the architecture and construction industry roared back from months of the pandemic lull and supply-chain issues.
In addition to reporting a nationwide score, each month the AIA’s report is broken down regionally. In November, the Northeast reported the largest decline in billings of all four regions with a low score of 42.4. In December the score increased, and notably, to 46.5, but still remains under 50. The region reporting the lowest number of billings in December was the West with a score of 45.5.
While November saw an increase in billings 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 billings index increased slightly to 49.4, up from November’s 47.6.
As with regional indicators, the sector breakdown saw decreases in the ABI score as well with multi-family residential coming in the lowest at 44.3. Institutional and commercial/industrial sectors had reported strong scores throughout much of 2022, but dipped quite considerably in the year’s final quarter with scores of 47.3 and 45.2, respectively. The only sector to see gains in billings was mixed practice, reporting a strong score of 54.8.
With 2022—a year of relatively strong economic growth, despite growing inflation—behind us, as Baker stated, it remains to be seen how architects will fare in 2023.