Archinect - News

Economic Pressures and Labor Challenges: How 2023 Shaped Architecture and Construction Industries

2023-12-28T07:49:00-05:00

The architecture industry was impacted this year by market volatility, rising interest rates, and evolving labor dynamics. This unusual business climate was reflected not only in the Architecture Billings Index (ABI) and the Dodge Momentum Index (DMI) but also in the pattern of job openings around the country, also observed through Archinect Jobs, the leading job board for the architecture industry in the USA.

AIA predicts slower growth in non-residential construction through 2023 and 2024

Hints of 2023's challenges began in late 2022, with a downturn in both the ABI and DMI to kick off 2023. This signaled a cautious approach by firm owners and clients alike amidst tightening credit conditions and rising interest rates. This recessed business landscape was quickly echoed in the job market, as seen by a substantial 51.9% decrease in job advertising volume in January 2023 compared to January 2022. This trend of reduced job postings continued throughout the year, with monthly declines r...

Residential business conditions weaken while remodeling remains popular, says AIA Home Design Trends Survey

2023-12-06T11:54:00-05:00

The American Institute of Architects has published its latest quarterly report on residential design in the United States. The AIA Home Design Trends Survey for Q4 2023 focused on the theme ‘neighborhood and community design,’ and revealed a desire among clients for simpler detailing on home exteriors and more windows.

Home exterior trends from the latest AIA survey. Image credit: American Institute of Architects

According to data from architects on client expectations, ‘contemporary home styles’ remain the most popular feature, mentioned by 51% of clients. ‘Simpler detailing on exteriors’ was requested by 29% of clients, and ‘front/side porches’ by 27% of clients.

On home exteriors, ‘low maintenance/durable exteriors’ was the most popular request, mentioned by 59% of clients. A focus on ‘windows (number and size) was cited by 48% of clients and ‘metal finishes’ by 35%.

Neighborhood/community trends from the latest AIA survey. Image credit: American Institute of Architects

On a neighb...

Construction starts drop 6% in September, driven by declines in every sector

2023-10-18T17:55:00-04:00

Construction starts for the month of September declined a total of 6% to a seasonally adjusted annual rate of $1.2 trillion, according to the latest Dodge Construction Network report.

The findings come on the heels of a converse 6% increase reported in last month’s index that was driven primarily by the strong performance of the manufacturing sector. Nonresidential starts lost 4% for September, while residential starts declined 6%, and nonbuilding starts fell by 9%.

“Risks continue to mount for the construction sector,” Richard Branch, the chief economist for the Dodge Construction Network, said. “Over the last 12 months, construction starts have essentially froze as rates increased and credit tightened. The industry needs further adjusting as rates are expected to stay higher for longer, along with the potential for higher energy costs and continued political uncertainty. A return to broad-based growth in construction starts is still some time away.”

Graphic courtesy of Dodge Cons...

Construction input prices marginally increased from last month, remaining 41% above pre-pandemic levels

2023-10-16T11:50:00-04:00

Construction input prices remain marginally higher than one year ago, according to an analysis of U.S. Bureau of Labor Statics Producer Price Index data conducted by the Associated Builders and Contractors (ABC). Overall construction input prices are 0.3% higher than a year ago, while nonresidential construction prices are 0.6% higher.

According to the ABC analysis, overall input prices have increased 0.2% over the past month, driven by a 10.1% increase in the price of crude petroleum, a 7.5% increase in unprocessed energy materials, and a 0.1% increase in natural gas prices. Among the inputs that decreased in value over the past month were steel mill products (down 3.7%), softwood lumber (down 1.7%), and iron and steel (down 2.4%).

Meanwhile, the inputs that have driven the 0.3% overall increase over the past year are brick and structural clay tile (up 6.4%), concrete products (up 9.1%), and construction machinery and equipment (up 6.1%). Price reductions that have helped counter s...

‘No sign of a construction recession in the near term,’ says ABC Chief Economist

2023-09-21T11:51:00-04:00

The Associated Builders and Contractors’ Chief Economist Anirban Basu has struck an optimistic note about the near-term health of the construction industry. The assessment comes as ABC releases its latest Construction Backlog Indicator, which found that backlogs declined to 9.2 months in August from 9.3 months in July. The figure remains 0.5 months above the August 2022 level.

“There’s no sign of a construction recession in the near term,” Basu said. “If anything, contractors are more upbeat, as policy and technology shifts along with economic transformation, are creating substantial demand for improvements and growth in America’s built environment.”

Construction Backlog Indicator. Image credit: Associated Builders and Contractors

ABC’s latest figures also suggest a divide in resilience between contractors with more than $100 million in annual revenues and smaller contractors. Backlogs among contractors with revenues over $100 million increased by 3.2 months from July, while backlogs...

Construction starts for August rise 6% with huge gains in the manufacturing sector

2023-09-20T14:42:00-04:00

The latest data from the Dodge Construction Network has indicated a 6% total rise in construction starts to a seasonally-adjusted rate of $1.3 trillion for the month of August, following a 17% rise that was recorded in July thanks to gains in the multifamily and nonbuilding sectors.

Nonresidential starts for the month rose by 40% thanks to a 285% increase in the manufacturing sector. Residential and nonbuilding starts both fell by 1% and 14%, respectively, while starts in the commercial and nonresidential building sectors both rose by 8% and 24% each.

“Despite the August gain, the construction sector is running uphill,” Dodge Construction Network chief economist Richard Branch said. “Fear of an imminent recession seems to have abated, which should provide a boost of confidence to the sector. However, higher interest rates, labor shortages and significantly tighter lending standards will weigh down starts in the final quarter of the year. This will persist for the foreseeable future...

Dodge Momentum Index sees 6.5% dip due to double-digit decline in institutional planning

2023-09-08T18:11:00-04:00

The August Dodge Momentum Index (DMI) reading dipped 6.5% to 178 from the revised July reading of 190.3. Over the month, the commercial component of the DMI fell 1.6%, and the institutional component saw a double-digit decline of 14.8%.

The notable contraction in the institutional sector was driven by a deceleration in education, healthcare, and amusement planning activity. Stronger hotel planning made up for weaker office activity resulting in a milder drop in the commercial component. Year over year, the DMI remained 4% higher than in August 2022, with the commercial and institutional sectors up 3% and 7%, respectively.

“Overall activity remains above historical norms, but weaker market fundamentals continue to undermine planning growth,” said Associate Director of Forecasting for Dodge Construction Network, Sarah Martin. “It’s likely that the full year of tightening lending standards and high interest rates has begun to affect institutional planning, which has otherwise been resi...

Rental apartment construction in the U.S. is at a 50-year high

2023-09-07T13:03:00-04:00

New rental apartment construction in the United States is expected to top a 50-year high in 2023. According to a report by RentCafe, nearly 461,000 units are expected to be delivered across the U.S. this year, meaning that over the past three years, 1.2 million units will have been built and brought to the market.

According to RentCafe’s analysis of Yardi Matrix data, the number of deliveries is expected to remain high until 2025, at which point the impact of current economic uneasiness will filter through to construction.

The New York metro area leads the country in terms of apartment construction, with 33,000 units to be opened in 2023. Almost one-third of the apartments will be located in Brooklyn (9,825), followed by Queens (4,430) and Manhattan (3,770).

Beyond New York, the Dallas metro area is the second most active, with 23,659 new rental units to come to market. The Dallas metro area has seen the most new apartments opened over the last three years, at 76,660 units. Other st...

Nonresidential construction spending shows marginal growth in ABC analysis

2023-09-05T14:56:00-04:00

National nonresidential construction spending saw a modest rise of 0.1% in July, according to a new analysis by the Associated Builders and Contractors (ABC) of U.S. Census Bureau data. When adjusted for seasonality on an annualized basis, nonresidential spending stood at $1.08 trillion, marking a 16.5% increase from the previous year.

The report found that of the 16 nonresidential subcategories, eight recorded an uptick in spending on a month-over-month basis. Private nonresidential spending showed an increase of 0.5%, while public nonresidential construction spending saw a decline of 0.4%.

“After today’s jobs report, which indicated that nonresidential construction added an outsized number of jobs in August, one would have expected a strong construction spending growth number as well,” said ABC Chief Economist Anirban Basu in a statement. “Alas, the economic data, just like the economy, continue to be full of surprises. In July, nonresidential construction spending barely expanded...

Demand for construction workers remains high as overall U.S. labor demand dips

2023-09-01T17:47:00-04:00

The nationwide demand for labor is dulling, but construction still faces a shortage of workers. Construction counted 363,000 job openings at the end of July, according to the Bureau of Labor Statistics, a decrease of 23,000 jobs from June.

As noted by the chief economist for Associated Builders and Contractors (ABC), Anirban Basu, job openings, across all industries, are at the lowest level since March 2021, and the rate at which workers are quitting their jobs has returned to the pre-pandemic norm. The demand for construction workers, however, still remains high. Last month's 363,000 job openings are still 10,000 more than the amount during the same period last year.

The recent dip in labor demand has been attributed to continued inflation and higher interest rates. According to Construction Dive, ABC members have indicated that they will still increase hiring efforts and are unlikely to lay off workers. Money entering the construction industry through legislation aiming to spur major projects is straining the pool of labor as contractors are competing for the same skilled workers.

To browse the latest architecture career opportunities, head to Archinect Jobs.

Construction starts rose 17% for July, propelled by gains in key areas

2023-08-16T17:43:00-04:00

Construction starts rose a total of 17% for July to a seasonally-adjusted rate of $1.2 trillion, according to the just-released report from Dodge Construction Network.

The latest data also indicated a 7% year-to-date drop in total construction starts when compared to the July 2022 totals. Nonresidential starts fell another 6%, while residential starts went up by another 20%.

“Construction starts have plateaued and are making little headway,” Richard Branch, the chief economist for Dodge Construction Network, said in a press release. “Higher interest rates, labor shortages, and material prices continue to impact the flow of construction starts — resulting in little forward momentum over the last 12 months. The lag in nonresidential building projects entering the planning stage will slow starts as the year progresses, which should be offset by rising infrastructure activity.”

Graphic courtesy of Dodge Construction Network

The sole cause for the 38% rise in the nonbuilding sector was t...

Leveling construction material costs and supply chain relief may signal inflation cooling, new report finds

2023-08-14T16:55:00-04:00

The latest Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics Producer Price Index data indicates that increasingly stable construction materials prices and recent supply chain improvements over the past few months may signal "positive economic outcomes" within the United States, Construction Dive reports.

"Goods prices continue to stagnate in the context of improved supply chains and a sluggish global economy," ABC Chief Economist Anirban Basu explained in the analysis. "It has been the improvement of supply chains that best explains recent positive economic outcomes in the U.S. economy. As supply chains have normalized, unmet demand has been more readily satisfied. That has propelled transactional volume and economic growth."

Image source: U.S. Bureau of Labor Statistics via the ABC (Aug 2023).

"At the same time," Basu continued, "the improved supply chain has helped push prices lower, contributing to the disinflation observable both in yesterday’...

Stagnation in commercial construction sees 1% Dodge Momentum Index decline

2023-08-07T17:03:00-04:00

Dodge Construction Network’s Dodge Momentum Index (DMI) fell by 0.9% in July to 193.4 from the revised June reading of 195.1. Last month, the commercial component remained relatively flat, declining only by 0.2%, and the institutional component fell 1.9%.

Planning in all commercial sectors pulled back or remained flat in July. Hotel planning experienced the largest dip, which marks four consecutive months of decline. The two largest institutional sectors, education and healthcare, saw a deceleration in the amount of projects entering planning. Year over year, the DMI is 21% higher than in July 2022, with the commercial components up 13% and 35%, respectively.

“While both segments of the Index fell this month, underlying project data points to divergent trends in the nonresidential sector,” said associate director of forecasting for Dodge Construction Network, Sarah Martin. “In comparison to January 2023, commercial planning activity is down 10% through July, while institutional pla...

AIA Chief Economist Kermit Baker looks into the financial headwinds and construction activity for the remainder of 2023

2023-07-27T19:27:00-04:00

The report that we just released is showing spending for the year up 20%. So, we’ve obviously seen a much stronger first half of the year than was anticipated. And that’s reflected in the current projection for 2023 as a whole. Since we’ve seen such a strong first half, the consensus is not for more acceleration in the second half. The consensus seems to be that strength is behind us and we’ll begin to moderate as we move into the second half of the year.

Baker predicts institutional construction will remain strong for the rest of this year, bolstered mainly by healthcare. Other sectors he expects to see a rebound include hospitality, K-12, and warehouses, albeit at a dampened pace for the third. He also mentions the new AIA Consensus Construction Forecast predicting a slight (1.7%) contraction in spending for 2024, along with another slight acceleration in institutional, and says both are likely to be exacerbated by the combined effects of inflation and other cost-related factors.

Explore related AEC economic news reported in June and July on Archinect below:

Total construction starts fall in June, continuing wavering trend in 2023

2023-07-24T13:20:00-04:00

Total construction starts continue to fluctuate, with a 9% dip in June resulting in a seasonally adjusted annual rate of $1 trillion, according to the latest Dodge Construction Network report. Nonresidential starts led the decline, falling 14%. Nonbuilding starts fell 9%, and residential starts dropped 4%.

Year-to-date through June 2023, total construction starts were 5% below that of 2022. Residential and nonresidential starts were down 24% and 2%, respectively, while nonbuilding increased by 29%. For the 12 months ending June 2023, total construction starts were 9% higher than that of 2022. Nonbuilding starts were 34% higher, and nonresidential building starts were up 25%; however, residential starts saw a 17% decline.

“Construction starts are oscillating — up one month and down the next,” said Dodge Construction Network chief economist Richard Branch. “The presence, or absence, of mega-projects is a key influencer in this trend. Nevertheless, high interest rates and tightening l...

Rebound in demand for design services in May, says AIA Architecture Billings Index

2023-06-21T14:43:00-04:00

The latest billings data from the American Institute of Architects has found there to be a rebound in the demand for design services across May 2023. The index score in May was the highest it has been since September 2022, while inquiries into new projects and design contracts reached their highest levels since February.

According to the latest Architecture Billings Index from May, the billings score was 51.0, up from 48.5 in April (a score above 50 indicates an increase in billings). Inquiries into new projects continued to post a positive score of 57.2, up from April’s 53.9, while new design contracts entered positive territory with a score of 52.3, up from 49.8 in April.

May ABI Highlights

Regional averages: South (52.3); Midwest (49.6); Northeast (48.7); West (47.7)
Sector index breakdown: institutional (53.4); mixed practice (firms that do not have at least half of their billings in any one other category) (52.7); commercial/industrial (47.5); multi-family residential (43.0)

"The...

Construction starts increase again in May following brief April decline

2023-06-20T17:13:00-04:00

New data from the Dodge Construction Network (DCN) has shown construction starts increasing to a seasonally adjusted annual rate of $1.11 trillion for the month of May following the 4% decline for April that ended a steady two-month series of gains.

Nonresidential starts rose 8% over the previous month thanks to gains in the manufacturing sector, while starts in the residential category were recorded to have declined at a 4% rate. Nonbuilding starts for the month rose a dramatic 24%, while the single-family sector recorded a 2% decrease following four consecutive months of gains. On a year-to-date basis, total construction starts were 6% below the first five months of 2022 overall.

Graphic courtesy of Dodge Construction Network

“May’s data is another sign that the construction sector is slowly splitting in two,” Richard Branch, the chief economist for the network, said in a statement. “Public dollars are flooding into the manufacturing and infrastructure sectors, leading to signific...

Architecture Billings Index for April indicates slight decrease despite upticks in future project inquiries

2023-05-24T12:25:00-04:00

New statistics from the American Institute of Architects' latest Architecture Billings Index (ABI) show a modest decrease for April, following the gains shown by the ABI in March for the first time since September.

The billings score for April dropped to 48.5, down from the March total of 50.4 (any score above 50 indicates an increase). Firms did report, however, that new project inquiries increased to a score of 53.9, though most practices continued to report a decline in the value of new design contracts to a score of 49.8.

April ABI Highlights

Regional averages: Midwest (51.2); West (49.3); South (48.7); Northeast (47.2)
Sector index breakdown: mixed practice (firms that do not have at least half of their billings in any one other category) (52.1); commercial/industrial (51.8); institutional (50.6); multi-family residential (41.5)

“The ongoing weakness in design activity at architecture firms reflects clients’ concerns regarding the economic outlook,” the AIA's Chief Economist Kerm...

Construction starts fall 4% in April due to steep decline in manufacturing

2023-05-19T14:21:00-04:00

According to new Dodge Construction Network data, total construction starts fell 4% in April to a seasonally adjusted annual rate of $1.04 trillion. This marks a slowdown after two consecutive months of increases.

Nonresidential starts led the decline, falling 22%. This was balanced by a 7% rise in nonbuilding starts and a 12% increase in residential building starts. On a year-to-date basis through April, total construction starts were 7% below the first four months of 2022. Residential starts were down 27%, and nonresidential and nonbuilding starts rose 7% and 16%, respectively. Total construction starts are 11% higher than the 12 months ending April 2022, with nonresidential and nonbuilding starts showing gains of 34% and 24%, respectively, while residential starts marked a 13% decline.

“The construction sector continues to sweep its economic worries under the rug, even with inflation, unstable banking, and the potential breach of the U.S. debt ceiling,” said Dodge Construction N...

March saw the highest rate of construction layoffs since the start of the pandemic

2023-05-04T17:49:00-04:00

The number of open jobs in construction dropped by 73,000 to 341,000 in March, the second lowest since mid-2021, according to an Associated Builders and Contractors’ analysis of new Bureau of Labor Statistics data. The openings represent jobs for which employers are actively recruiting.

This figure reflects a 17% decrease in job openings from March 2022. The quantity of open jobs has been volatile so far this year as January saw a 50% dip followed by a sharp rebound in February. According to the Associated Builders and Contractors (ABC), 3.7% of construction workers were laid off or discharged in March, which is the highest rate since the start of the pandemic.

Previously on Archinect: Construction job openings in February rebound after sharp dip in January

ABC attributes the fall in job openings to fragility in the single-family homebuilding sector. While this is cause for alarm, only a little over 9% of ABC members, which mainly work in the nonresidential sector, expect their staffing levels to fall over the next six months. It is expected this landscape will remain the same over the next few months as inflated interest rates are set to rise again.

Construction starts rose 19% in March as concerns over the impact of the Silicon Valley Bank collapse loom

2023-04-20T13:40:00-04:00

March data from the Dodge Construction Network (DCN) has shown an increase in construction starts of 19% to what is now a three-month high despite concerns over the industry’s ties with Silicon Valley Bank following the financial institution’s controversial collapse at the beginning of the Month.

Nonresidential starts for the month rose by 33%, with residential starts up by 5%. Nonbuilding starts increased by 17% to a seasonally-adjusted rate of $263 billion, led by a 35% increase in environmental public works projects and a 16% boost in gas and utility plants. Overall year-to-date nonbuilding starts gained a total of 12% for Q1.

Graphic courtesy of Dodge Construction Network

“Construction starts activity has yet to see the impact of tightening financial conditions in the wake of the failure of Silicon Valley and Signature Banks,” Richard Branch, the chief economist for Dodge Construction Network, said in a statement. “Several large manufacturing projects are breaking ground; pushing...

March Architecture Billings Index shows an increase for the first time since September

2023-04-19T13:06:00-04:00

New data from the American Institute of Architects' latest Architecture Billings Index (ABI) shows an increase for the month of March, ending a five-month streak of declines in spite of a slight decrease in the overall number of new contracts during the same 30-day period.

The billings score for March increased to 50.4 in March, up from February’s 48.0 figure (any score above 50 indicates an increase). As mentioned, the value of new design contracts declined to 48.9 in March, down from a score of 51.3 that was recorded the month before.

March ABI Highlights

Regional averages: Midwest (51.4); Northeast (49.1); South (47.4); West (47.2)
Sector index breakdown: mixed practice (firms that do not have at least half of their billings in any one other category) (53.9); institutional (48.8); commercial/industrial (49.7); multi-family residential (44.2)

“In spite of the positive movement in architecture firm billings in March, core concerns remain,” the AIA’s Chief Economist Kermit Baker said. ...

Construction labor shortages remain due to surge in nonresidential demand, Wall Street Journal reports

2023-04-12T11:57:00-04:00

U.S. contractors are struggling to meet the demand for nonresidential construction projects, according to new reporting by The Wall Street Journal. Despite a decline in residential construction triggered by rising interest rates, contractors have reported that spending on nonresidential projects has continued to surge.

Such sentiments are substantiated by recent figures from the U.S. Census Bureau, which found that spending on nonresidential construction in February was 17% higher than the previous year at $982 billion.

According to The Wall Street Journal, nonresidential construction activity has been boosted by new plants for electric vehicles, warehouses for e-commerce businesses, and manufacturers who are relocating operations to the U.S. after the fragility of global supply chains was exposed during the COVID-19 pandemic. Increased federal spending on public works projects, defense, and t...

Construction job openings in February rebound after sharp dip in January

2023-04-05T17:04:00-04:00

After a “simply shocking” January where half of construction’s job openings vanished, the number of positions for which contractors are actively recruiting increased by 129,000 in February, according to analysis of Bureau of Labor Statistics data by Associated Builders and Contractors.

January witnessed a 50% drop of construction job openings from the month before, with 248,000 unfilled jobs available that month. This figure was 148,000 jobs below the same time last year. A sharp rebound in February saw 412,000 job openings, which led the likes of ABC Chief Economist Anirban Basu to designate January as a “statistical aberration”. However, this number is still down 9,000 compared to the year prior.

Basu said that demand for construction workers remains high even with the threat of a recession, the slow implementation of the United States’ infrastructure rebuilding program, higher interest rates, and financing concerns. He goes on to say that the rise in job openings indicates that nonresidential construction firms are expecting growth as they anticipate increases in sales, employment, and profit margins. Despite high demand, Construction Dive noted a report by the Associated General Contractors of America that many employers lack the staffing to bid on projects.

...

The ABI reports demand for design services declined again in February for the fifth consecutive month

2023-03-22T18:32:00-04:00

The latest data from the American Institute of Architects (AIA) has shown a decline for the industry in February, bolstering a downward economic swing that has lasted through the new year as the prospect of a recession grows ever closer.

The Architecture Billings Index (ABI) for the month was at 48.0, down slightly from the 49.3 figure that was recorded for January. New project inquiries did increase, however, along with the overall value of new design contracts. The AIA says these both provide indicators as to improve business performance over the coming months.

With the negative figure (only scores above 50 are considered positive) the ABI has now posted declines from the previous month five times in a row.

February ABI Highlights

Regional averages: West (50.4); Midwest (48.8); Northeast (48.4); South (47.3)
Sector index breakdown: mixed practice (57.0); institutional (46.9); commercial/industrial (45.8); multi-family residential (46.2)

“The combination of an unsettled economy and ...

Demand for design services continued to fall in January, though at a slower rate, says AIA Architecture Billings Index

2023-02-22T13:11:00-05:00

The latest billings data from the American Institute of Architects has found there to be a continued albeit slower decline in the demand for design services across January 2023. The reduction is the fourth month in a row where billings declined versus the previous month.

According to the latest Architecture Billings Index from January, the billings score was 49.3, slightly up from the seasonally-adjusted score of 48.4 in December. A score below 50 nonetheless indicates a decline in billings. Inquiries into new projects continued to post a positive score of 55.2, slightly up from December, while new design contracts entered positive territory with a score of 53.4, up from 50 in December.

January ABI Highlights

Regional averages: South (46.9); Midwest (51.6); West (51.3); Northeast (50.9).
Sector index breakdown: mixed practice (56.0); institutional (48.6); multi-family residential (45.9); commercial/industrial (46.8)

“While the downturn in design activity extended to four months in Jan...

Autodesk announces layoffs of 250 employees

2023-02-07T15:41:00-05:00

Software company Autodesk is cutting its total global workforce by less than 2 percent, with about 250 workers affected. A spokesperson for the San Francisco-based firm said the layoffs are part of Autodesk’s plans for its 2024 fiscal year, which began this week.

The company maintains it is still hiring for a number of positions in different locations globally. The layoffs come as an increasing number of non-architect AEC professionals are using BIM software in their day-to-day workflows, despite criticism from firms of a lack of “serious development” regarding Autodesk's proprietary software.

The move puts the company squarely in line with Amazon, Meta, and other tech giants whose cutbacks call into question employment prospects of workers. CRN also reported the company’s stock to be down 7% in the last twelve months.

Demand for design services continue to fall in December’s AIA Architecture Billings Index

2023-01-26T11:15:00-05:00

New data from the American Institute of Architects has found there to be a continued decrease in the demand for design services across December 2022, continuing a trend that began two months previously.

According to the latest Architecture Billings Index for December, the billings score was 47.5, slightly up from 46.6 in November. A score below 50 nonetheless indicates a decline in billings. Inquiries into new projects continued to post a positive score of 52.3, although new design contracts remained in negative territory with a score of 49.4.

December ABI Highlights

Regional averages: South (48.8); Midwest (49.4); West (45.5); Northeast (46.5).

Sector index breakdown: mixed practice (54.8); institutional (47.3); multi-family residential (44.3); commercial/industrial (45.2)

“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...

AIA predicts slower growth in non-residential construction through 2023 and 2024

2023-01-17T12:41:00-05:00

The American Institute of Architects has published a forecast for nonresidential construction spending for 2023 and 2024, in which it projects positive though modest growth. The AIA Consensus Construction Forecast was computed as an average of nine separate forecasts for nonresidential construction made by industry groups.

According to the AIA’s forecast, 2023 will see gains of just under 6% in nonresidential construction spending versus the previous year, with 3% for the commercial sector, 15% for industrial facilities, and 4% for institutional buildings. In 2024, the forecast expects annual nonresidential spending growth of under 1%, with a decline of 1.4% for commercial, a 0.4% increase for industrial, and a 3.8% increase for institutional facilities.

Screenshot from the AIA Consensus Construction Forecast 2023. Image credit: American Institute of Architects

“Entering 2023, the construction industry will be confronted with mounting challenges,” said AIA Chief Economist Kermit Bak...

November Architecture Billings Index shows demand for design services continues to slow

2022-12-20T14:10:00-05:00

Data taken from the latest American Institute of Architects (AIA) report shows a continued decrease in the demand for design services industry-wide in November as economic concerns for the new year loom.

The new Architecture Billings Index (ABI) score for the month was 46.6, down from October’s 47.7 figure (a score below 50 indicates a decline). New project inquiries managed to stay above the threshold with a score of 52.0, while the requisition of new contacts dipped slightly to a score of 46.9.

November ABI Highlights

Regional averages: South (50.5); Midwest (47.6); West (45.8); Northeast (42.4)
Sector index breakdown: mixed practice (51.5); institutional (47.7); multi-family residential (46.1); commercial/industrial (44.2)

“Given the slowdown in new project work, many architecture firms will rely on their near record levels of backlogs to support revenue,” said the AIA's Chief Economist, Kermit Baker, Hon. AIA, PhD. “Still, firm leaders remain largely optimistic about future busin...