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Slow Going
Billings index, still down, makes modest gains in July

The Numbers

Could it be the Heisenberg Uncertainty Principle is at work, that the AIA’s Architecture Billings Index will not climb from the doldrums until AN packs it up and stops reporting the grim blow-by-blow every month? Well, too bad. Until things improve, the editors of this publication shall never forsake their duty to provide the architects of the world with the facts.

The good news? Things are improving. Technically, at least. Almost all indicators are up for the month, though they remain below that all-important 50-point marker, the pivot between expanding and contracting construction markets. For example, overall billings rose only 0.7 points from the month before, to 46.8. This is the highest reading since January, when the index measured 50.8 and began its precipitous decline into the worst territory it has reached in the 13 years the AIA has tracked billings.

In one bright spot, inquiries are up again, to 54.6 from 51.8 last month, continuing a rise from an all-time low in May of 46.5. And across all sectors billings rose, though numbers remain low with the continued exception of the institutional sector, which tends to do more work during downturns, because budgets tend to be more stable and materials and labor are generally cheaper. (It remains to be seen if the latter is true, given precipitous inflation rates.)

Institutional projects rose 2.0 points to 53.6 and mixed-use projects 1.5 points to 45.6. Commercial and industrial projects rose 3.0 points to 48.8, marking the fifth straight month of growth, from a low of 38.3 in March, perhaps signaling a recovery in that sector. Residential projects also rose, but prospects still remain weak as the sector remains below the 40-point mark. Residential billings rose 1.3 points to 39.2.

Regional performance was mixed. The Midwest, the strongest performer, dropped 1.8 to 50.0, but with three straight months of positive readings, the region may have begun a real recovery, as opposed to the fluctuations that have cropped up previously throughout the index. The Northeast was the second biggest gainer, jumping 5.8 points to 46.5, though it was beaten by the battered West, which gained 6.1 points to settle at 42.2. The South was the other loser of the month, falling 2.2 points to 47.7.

The AIA did recognize the modest gains the index made this month, but Kermit Baker, chief economist for the group, still gave a glum assessment for future performance. “Financing for new projects continues to be a problem,” Baker said in a release. “Many projects are being reconsidered due to construction cost increases. And while there are a good number of projects still in the queue, owners are taking longer to proceed to the next phase of the design process.”

Matt Chaban