The American Institute of Architects (AIA) has published its Architecture Billings Index (ABI) report for the month of July, showing demand for architecture billings maintaining a similar level of economic contraction as the month of June amid a spike in COVID-19 cases and the re-imposition of lock down initiatives across many states.
According to a summary of the report's findings, July's ABI "failed to show any progress during July, and business conditions continued to be soft at firms" as "newly signed design contracts declined more critically" than overall demand, foreshadowing continued economic contraction within the architecture industry in the months ahead.
Demand for design services declined for the fifth consecutive month in July, according to the report, though the decline was less severe than for the months of March and April. Interest in new projects declined slightly more than June's 49.3 score, highlighting a continued drop in interest for new projects among potential clients while, as stated previously, the execution of new contracts dropped from June's 44.0 measure.
Analyzing the report's findings, AIA Chief Economist Kermit Baker, PhD, Hon. AIA. explains, “It’s clear the pandemic continued to contribute to uncertainty in business conditions, especially as cases spiked in states across the country,” adding, “While clients expressed interest in exploring new projects, many are hesitant to sign onto new contracts with the exception of the multifamily residential sector, which came close to seeing billings growth in July.”
The level of decline among regional markets was slightly less than that for the month of June, though a deep economic contraction is still taking place within the architecture industry. As has been the case for many months, the West region performed best, relatively speaking, while the Northeast sector continued to trail other regions. The report indicates that "V-shaped" economic recovery anticipated by economists at the onset of the pandemic is unlikely to materialize any time soon.
Of the four market sectors AIA measures in its ABI report, only multi-family residential projects came close to showing signs of growth. The contraction for that sector was relatively minor, with mixed practice project types following closely behind. Institutional and commercial/industrial continued to show steep declines amid deep uncertainty for these project types. Residential construction has remained somewhat strong throughout the crisis relative to other market sectors coming off of strong showings in late 2019 and early 2020.
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