Architecture Billings Has Another Solid Month in July

Architecture billings remained strong in July with a score of 51.9 according to the latest report from the American Institute of Architects (AIA). This marks the sixth straight month of growth in demand for design services. July’s score was down a bit from June’s 54.2, but still indicates an increase in design services because any score above 50 reflects an increase in billings and any score below 50 indicates a decrease.

The Architecture Billings Index (ABI) acts as a barometer for nonresidential construction activity. The average lead time between architecture billings and construction spending typically ranges between nine months to a year.

The new projects inquiries index and the design contracts index both had solid gains in July. The new projects inquiry index increased from 58.6 in June to 59.5. The new design contracts index jumped from 53.7 to 56.4. These scores are strong indicators that billings will continue to remain strong throughout the rest of the year.

All four regions of the country are seeing increased billings based on their rolling three-month averages. The South and Midwest led the way with both scoring a 53.8 in July. The South is down one point from June’s 54.8 and the Midwest saw a healthy increase from 51.9 the month prior. The Northeast region had a nice increase from 51.5 in June to 53.6. The West declined from 53.1 to 50.9 for July, still indicating growth because the score was above 50.

Demand for design services across the various sectors was positive with the exception of Mixed Practice which dropped from 53.8 in June to 48.4 in July. Multi-Family Residential led all sectors with a score of 55.8 down from the 57.1 in June. Commercial/Industrial had a nice increase in July going from 52.1 the previous month to 55.4. Institutional saw a small dip in its June, dropping from a score of 52.6 to 52.0 in July.

Here is Chief Economist Alex Carrick’s analysis on the latest ABI report:

“The latest ABI report from the American Institute of Architects (AIA) offers encouragement to a construction sector that has recently grown a little less certain about its prospects.

“Both ConstructConnect’s statistics on ‘starts’ and the Census Bureau’s figures on ‘put-in-place’ capital investment have seen their growth momentum diminish in the last couple of months.

“Furthermore, federal government stimulus to be provided by personal and corporate tax cuts and by a promised program of massive spending on infrastructure has, so far, failed to materialize.

“Activity levels with design firms are a good predictor of work that will flow down the pipeline and lift onsite ‘hard hat’ employment.

“Therefore, it’s welcome news that the all three of the AIA’s indices – ‘billings,’ ‘new project inquiries’ and ‘design contracts’ − remain above 50% and that the latter two aren’t just standing still, they’re climbing.”

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