Posts tagged with "Architecture Billings Index":

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Upward March: Billings Index Regains Positive Territory

The Architecture Billings Index is up, hitting 52.0 in November, the first positive ground since touching 51 in August (anything over 50 indicates an increase in billings). The roller-coaster volatility of the past few months—we held our breath and skipped reporting September’s down and October’s up—suggests cautious optimism that the index which tracks the approximate nine-month lag time between architecture billings and construction spending is finally in a solid swing upwards. Kermit Baker, AIA chief economist, who also spent the fall refusing to jinx the index with overpromises, said in a statement: “Hopefully, this uptick in billings is a sign that a recovery phase is in the works. However, given the volatility that we’ve seen nationally and internationally recently, we’ll need to see several more months of positive readings before we’ll have much confidence that the U.S. construction recession is ending.” The regional highlights were a mix: with only the South (54.4) and the Midwest (50.9) in the black. Optimism is reflected in a big leap however in inquiries up to 65.0 from last month’s reading of 57.3. It looks like 2012 may well be the year to breathe again.
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August Billings Index Bounces Back

They’re back! Positive numbers for the Architecture Billings Index (ABI) jumped up in August to 51.4 from a dismal 45.1 in July where it had been stewing in negative land for months. (Anything over 50 indicates positive growth.) Together with a sharp rise as well in Project Inquiries to 56.9 (up from 53.7), the good news seems cautiously solid. “This turnaround in demand for design services is a surprise,” said AIA Chief Economist Kermit Baker. Regional averages, however, remained below the positive bar across the country indicating that firms generally are still struggling. These numbers predate the next injection of stimulus money—whatever shape it takes—which will be sure to give another jolt. Unless, of course, billings are tracking the roller-coaster antics of the stock market. “The stock market is doing what the economy is doing which is not moving solidly in one direction, either way,” Baker said by phone. “The stop-start that we have seen over the past two years is going to stay with us. I would love to believe that these latest numbers are the start of a Grand Recovery. And maybe they are. The evidence is just not there yet to be sure.”
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Billings Bummer Yet Again in July

For the fifth straight month the Architecture Billings Index (ABI) has posted negative figures, with the only positive number on the chart coming from billing inquiries. The overall number dropped from 46.3 in June to 45.1 in July (any ABI number below 50 is considered negative). AIA Chief Economist Kermit Baker once again pointed to the larger economy as the source of industry woes. “The stuff that’s going on with the national level is consistent with what we’re experiencing,” said Baker, adding that given the current political situation he didn’t think another stimulus package would make it through Congress. “The politics of that is going to be tough; there’s a problem with increased spending,” he said. Even if it did, the last package didn’t really trickle down to the industry. “I have a hunch if there’s a chance it would go through, it would look a lot like the last stimulus and architects didn’t get a lot from that,” he said. There were no regional leaders this time out, with all areas falling below 50. The West went from 51.7 to 46.6, the Midwest 44.6 to 44.9, the South 47.3 to 46.9, and the Northeast went from 47.6 to 46.4. In the sector breakdown, mixed practices dove from 51.7 to 47.1, while commercial/institutional slipped from 50.0 to 47.9. Multi-family residential fell from 49.6 to 44.7, and institutional shifted from 45.9 to 47.2. Meanwhile, last month’s light at the end of the tunnel, a project inquiry index of 58.1 got a lot smaller, falling to 53.7. While still a positive number, Baker said last month’s inquiries didn’t translate into good numbers for this month. “It’s going to take a broader turnaround in the economy,” he concluded.
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Billings> Index Tumbles to Lowest Point in 6 Months

In what can only be described as an about face, the Architecture Billings Index (ABI) took a bit of a tumble into negative territory last month. The April ABI fell to 47.6 from 50.6, beating even October’s low of 48.7. At the end of 2010, words like “rebound” were cautiously bandied about, but for the past three months the ABI skated along the edge of positive territory hovering around 50. Now with numbers the lowest they’ve been for the last six months AIA Chief Economist Kermit Baker began to analyze reasons why. “We get a lot of comments on the panel that we tried to get a sense of what’s going on and we got some reasons of what could be with us for while,” said Baker. He noted that construction projects funded under the federal stimulus completed their design work and needed credit to move forward. “A lot of the public stimulus has run its course, and the theory was that the private sector would pick up where the stimulus ran out,” said Baker. But 60 percent of the panelists responded that delayed financing has them sitting on at least one incomplete project. “Some of them are probably dead,” Baker said of the projects. In addition to the credit crunch, severe weather also depressed figures. The storms that whipped through parts of the South last month had an effect and analysts are keeping an eye on the rising waters of the Mississippi. Indeed, as a region the South dipped further down from 49.7 in March to 48.3 in April. The Midwest kept its head above water at 51.1, but this was less than March’s 53.5 gain. The Northeast remained steady at 51.2 from March’s 51.4. Unfortunately, the West took their all-too-familiar backseat. After finally pulling into positive territory at 50.6 in March; they’ve stumbled back to 47.7. The sector breakdown saw residential rise from 50.8 to 53.9, commercial/industrial fell from 54.7 to 49.9, institutional fell further from 48.0 to 45.9, and mixed practice slipped from 49.8 to 45.2. Project inquiries for the month were at 55.0. Baker pointed out that the overall trend of the last five months was growth, but with three months having numbers hovering around 50 it’s not surprising when it dips. “We don’t get too excited about one month on the upside or one month on the downside,” he said. Still, while there’s not much room for cheer, Baker noted that there is room for hope. “There’s some residual optimism of two quarters of positive numbers,” he said, noting that downward numbers could be a blip. “We’ll see if that upward trend is something that could be sustained.”
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Signs of Life for Architecture?

According to Crain's New York, the city's five biggest firms began rehiring last year. Kohn, Pederson Fox, Perkins Eastman, Gensler, HOK, and SOM all began staffing-up, though all five firms pointed to international work as driving much of the growth. “New York started coming out of the recession earlier than the rest of the country, and business is improving, but it's still uneven,” Bradford Perkins, chairman and chief executive of Perkins Eastman, told the business journal. Perkins Eastman added around 30 architects last year. Nationally, billings have been back in positive territory for the last few months, though results vary substantially by region. And today the AP reported that new home construction is beginning to bounce back. Are you feeling a rebound?
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Pace Yourself

Billings (blue) and inquiries (red) for the past 12 months.
The Architect's Newspaper
  According to the AIA, February Billings stagnated at 50.6, a fraction higher than January’s 50.0. Though any number above 50 is considered positive territory, AIA Chief Economist Kermit Baker found the new results tepid at best. “Overall demand for design services seems to be treading water over the last two months,” Baker said in a statement. New inquiries also maintained a hovering action, hitting 56.4 in February, from 56.5 in January. February Billings
Billings by region: Northeast (orange), Midwest (blue), South (red), West (green).
The Midwest leads the national pack, with an index reading of 55.3. The area outperformed the rest of the country but dropped ever so slightly from its January high of 56.4. The South followed with 50.1, while the West and Northeast fell into negative territory at 49.1 and 46.4 respectively, with the West finally ceding its long held last place position to the Northeast.   The sector breakdown took the commercial/ industrial index to 55.0, up from 54.6 last month. Mixed practices pulled out of the negative territory from 48.7 up to 51.3. Multi-family residential dipped to 49.7 from 53.7, and institutional moved slightly from 48.7 to 48.9. Project inquiries remained fairly steady at 56.4, though down marginally from 56.5. February Billings
Billings by sector: Residential (green), commercial/industrial (pink), institutional (gold), mixed-use (purple).
While construction added 33,000 jobs, architecture firms dropped 1,000 after a mid-2010 uptick in hiring. An AIA survey panel found that nearly a quarter of all firms surveyed (24 percent) received some form of revenue resulting from the American Recovery and Reinvestment Act. The flat results of the first two months of 2011 dampened the hopeful mood resulting from an upswing in the fourth quarter. Still, in the end Baker found the glass to be half full. “We’ve been preaching patience and cautious optimism for a full recovery because there continues to be a wide range of business conditions for architecture firms that are also influenced by firm size, practice specialties, and regional location,” said the economist. “We still expect the road to recovery to move at a slow steady pace.”
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Billings Dips But Stays in Positive Territory

The Architecture Billing Index (ABI) dropped nearly four points in January, but just managed to stay in positive territory with a score of an even 50 (any score below 50 indicates shrinking billings). The new projects enquiry index also fell significantly from 61.6 in December to 56.5 in January, but remained comfortably in positive territory. Even with the fall in the indexes, the AIA believes the overall trend is stable with mild growth. "We've been taking a cautiously optimistic approach for the last several months and there is no reason at this point to change that outlook," said AIA chief economist Kermit Baker in a statement. Significant regional differences persist. The Midwest led in January with a score of 56.4, the South picked up with an index of 51.3, and the Northeast stayed in positive territory at 50.4. The West continued to drag down the overall index with a score of 47.3. The differences were smaller across sectors. Commercial industrial billings scored 54.6, multi-family residential came in at 53.7, and institutional worked billings totaled 51.3. The mixed-practice index was lowest at 48.7.

Bumpy Ride

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Recovering Architects

Yesterday, we reported on the continued improvement of the AIA Billings Index, which has shown its best performance in two years. While things have not totally recovered yet, there is more to this story than just number. We've been hearing stories, too, of those so-called green shoots popping up here and there. Take for example a recent tweet by Gensler heralding the 63 spots that the firm is trying to fill across the globe. The simple missive—"Sign of the times: we're hiring for 63 positions!"—ricocheted around Twitter, a sign of hope and promise among those wired architects. Clearly, this is the kind of good news people are looking for, so we want to hear more. Please leave your stories in the comment section below or send them to editor[at] We'll try and highlight them in a few days.
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Regional Rebound?

For the forth month straight, billings for firms in the Midwest are showing the strongest uptick of the four regions tracked by the AIA. And for the first time since the recession, in March billings in the Midwest have moved into positive territory, breaking the 50 mark, making it the first region to do so since the recession began. (Anything below means billings for work are falling, above rising.) In the graph above, the Midwest region is represented in red, the East in blue, the West in green, and the South in orange. According to the numbers, the recovery has arrived. In other positive economic news, home sales in the Chicago area were up 45% in March over the same period last year. Within the city of Chicago the gains were even greater, posting a 50% increase over the same period last year, according to Crain's Chicago Business. The glut of unsold condos has put a damper on many development projects, so it's encouraging to see the market moving again.
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Strike Two? Not So Fast

First Laurie Olin, now Frank Gehry. That was the news earlier this week when the Wall Street Journal reported that the Santa Monica-based architect had laid off "more than two dozen" staffers involved with Bruce Ratner's Atlantic Yards project. What followed was a string of cheers predicting the troubled Brooklyn mega-development's demise. After all, how could it go on without its signature architect? While considering this question, I kept thinking of a comment made by Kermit Baker yesterday, during an interview about the abysmal November billings index. Given what's going on elsewhere in the industry, the termination of a handful of architects may not signal the doomsday scenario the project's critics would like, and instead may be one more credit-related payroll pause like many others around the nation:
What we're seeing, as a result of the credit freeze, is a lot of projects, even a lot of good projects, being put on hold. Once the credit markets begin to unfreeze, though, a lot of this work will come back. You know, "Okay. We got our financing back in place, why don't you get back to work on this." It's very disconcerting because these sudden seizures can be very unexpected. It's hard to own and manage and know how to cope.
Hence the layoffs, largely unforeseen, plaguing firms nationwide, a problem we've noted before. Though Baker was not speaking specifically to the Gehry/Atlantic Yards layoffs, he said he was seeing the same sort of "payroll activity" at many of the dozens of firms he surveys to put together the billings index. The upshot to all the bad news, Baker said, is that it is possible that, as credit becomes available again, a number of projects could come back online:
There are some projects that do make sense in this economy. Obviously, the list of ones that don't make sense has gotten longer and the list of projects that do make sense has gotten shorter. But there was a time when even those projects could not get financing. I expect that to change at some point, hopefully in the near future.
And while financing could very well turn around for the project, as Baker speculates, the Observer is not so sure it will. Furthermore, the Daily News reports today that Gehry and Ratner may not be on the best of terms, as the architect has not been paid for what the paper reports are still unfinished Phase One designs. Still, the point is that, while the layoffs could be another possible death knell for Atlantic Yards, they could also simply be the economizing of one of many architects in dire straits at the moment. As for Gehry's office not returning phone calls--something the Daily News and others see as a sign that the project is faltering--don't read too much into that, either. The firm is notoriously press averse, even on the most laudatory pieces, almost never returning phone calls.
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Landscapers Short On Green, Too

We've been tracking the AIA Architecture Billings Index ever since it took a dive last spring. But what about the rest of the design industry? Well, the American Society of Landscape Architects released its quarterly survey of member firms, and the numbers are no better than their brick-and-mortar friends. In fact, the numbers are even worse, with only 16 percent of firms experiencing growth in their billings and 43 percent having stable or rising inquiries. Nancy Somerville, executive vice president and CEO of the society, said that with the market the way it is, the downturn was to be expected. “The reduced demand for landscape architecture work comes as no surprise considering the current problems with the economy,” Somerville said in a release. “International projects, particularly in the Middle East and Pacific Rim, are a strong and expanding source of work for many firms. Domestically, the public sector remains the most robust source of projects.” Not surprisingly, architects are seeing the same trends. As for the landscape designers, those are: Compared to last quarter, your billable hours are: Well above average – 5.6% Slightly above average – 17.3% Right where they usually are, average – 21.1% Slightly below average – 38.3% Well below average – 17.7% Compared to last quarter, your inquiries are: Well above average – 2.3% Slightly above average – 14.7% Right where they usually are, average – 25.7% Slightly below average – 35.5% Well below average – 21.9% Compared to the same quarter a year ago, your second quarter 2008 billable hours were: Higher – 17.9% About the same – 23.7% Lower – 58% Don’t know – .4% Compared to the same quarter a year ago, your second quarter 2008 inquiries were: Higher – 12.5% About the same – 27.8% Lower – 59.3% Don’t know – .4% Do you plan on hiring any employees in the upcoming quarter?: Experienced landscape architect – 6.8% Entry level landscape architect – 9.4% Support staff – 7.9% Intern – 4.1% Other – 6.4% Not hiring – 74.4% Role of sustainability issues in candidates’ platforms: High on candidates’ agendas – 9.4% Cited more than in the 2004 campaigns – 38.9% About the same as 2004 – 14.0% Cited less than 2004 – 4.2% Not a significant part of the candidates’ agendas – 31.3% Other – 2.3%