The American Institute of Architect’s Architecture Billings Index (ABI) fell sharply in April–the first slowdown in billings at architecture firms since last October. Business conditions at architecture firms had been slowly improving for the last few months, so it remains unclear if this month’s downturn is a bump in the road to recovery, or indicative of a longer-term reversal in the two-quarter recovery in design activity.
Firms reported that the threatened federal government shutdown, tornadoes though the Southeast, and the winding down of federal stimulus funds for building activity all were impediments to design activity in April.
Inquiries for new projects remained strong last month. However, another indicator of future design work paints a less optimistic picture. In April, the share of firms reporting that the value of new design contracts had decreased as compared to March levels was equal to the share that reported that the value had increased. In March, significantly more firms reported a net gain in design contracts over the prior month.
Business conditions at architecture firms located in the Northeast and Midwest regions of the country continued to improve in April, but firm billings weakened at firms in the South and West regions. Firms in the West have still not emerged from the economic downturn, while firms in the South had reported some improvement earlier this year, but have weakened in recent months. However, some firms in the South reported that an uptick in work may be coming in due to the need to rebuild from the recent tornados and storms. The current flooding along the Mississippi River basin may also necessitate future reconstruction activity.
Firms that have an institutional specialization, as well as those with a commercial/industrial specialization, had a fairly significant slowdown in their ABI scores in April. Business conditions remain particularly weak for institutional firms, despite indications of some growth in late 2010 and early 2011. Firms with a residential specialization continued to do relatively well in April, posting their seventh consecutive month of billings growth, reflecting improvement in multifamily design activity. Read More.