In its monthly Architecture Billings Index (ABI) report the AIA said “the pace of decline during August accelerated.” This is a turn from July’s report which noted a decline in billings at architecture firms across the country, but at a slower rate than recent months. August’s score of 45.7 is another notable drop from the previous month 48.2. Any number lower than 50 indicates a drop in billings from the previous month.
August’s drop marks the nineteenth consecutive month to see a dip in billings reported by architecture firms. The report also keeps tabs on new project inquiries, which didn’t budge from July to August, a somewhat reassuring thought given its score of 52.4.
A statement from the AIA chief economist Kermit Baker shared disappointment that the promise of an “impending” cut to interest rates had no effect on the dwindling business conditions of the last year and half. “Unfortunately, even the impending interest rate cuts didn’t move the needle on project inquiries or new design contracts at architecture firms,” Baker said. “Hopefully, once the trajectory of further cuts gets clarified, delayed projects will restart, and new projects will gather momentum.”
In July it seemed the Northeast region had regained some momentum after it reported two straight months of increased billings, with scores higher than 50. In August this dropped off and the region remains the strongest nationwide, but dipped below 50 to 48.2. Other regions saw little to no improvement.
In addition to regional averages, the Architecture Billings Index also regularly reports on the rate and improvement of billings by project type. In August all sectors reported declines in billings, with practices working on a mix of typologies reporting the lowest drop in billings.
As the final quarter of the year winds down, all eyes, whether you’re an economist or not, remain on the Federal Reserve and its cut to interest rates. The financial institution meets today to discuss a cut that many hope will be the jolt to propel investors and project developers to be more willing to kick off new projects. One also has to wonder about the impact of November’s election on the economy’s current precarious state.