Architecture firm billings grew at a modest pace in September. While the Architecture Billings Index score of 51.7 for the month means that slightly fewer firms reported increasing billings this month than in August when the score was 53.3, growth continued at most firms for the 20th consecutive month.
However, there are some areas worth monitoring in the coming months. Two indicators of future work, client inquiries into new projects and the value of new design contracts, recorded their lowest post-pandemic growth rates in September as fewer clients are expressing interest in new projects now than in the last year and a half. However, backlogs at firms remained at a robust 7.0 months as of the end of September, still near record-high levels since we began collecting this data regularly more than a decade ago.
Firms in all regions of the country reported billings growth for the second month in a row in September, with the strongest conditions reported by firms located in the Northeast and Midwest. However, there was more volatility by firm specialization this month. Both firms with a multifamily residential specialization, as well as those with a commercial/industrial specialization, saw their billings decline in September, for the first time since the post-pandemic recovery began. On the other hand, firms with an institutional specialization reported very strong business conditions this month, with billings reaching their highest level in several years.
Architectural employment is high, but recession still looms
In the broader economy, employment growth slowed in September, with only 263,000 new nonfarm payroll positions added, in contrast to an average of 420,000 new positions added per month throughout the rest of the year. The construction industry added 19,000 new positions in September, and specialty trade contractors added 18,000, as they face similar issues to the architecture industry, with not enough staff available to keep up with workloads.
Meanwhile, the architecture industry added an additional 1,100 positions in August, the most recent data available, following the 1,200 that were added in July. The profession now has 4,000 more employees than its pre-pandemic peak, although it remains well below its all-time high from immediately before the Great Recession.
Despite the softening in hiring, The Conference Board’s Consumer Confidence Index increased for the second consecutive month in September, with consumer optimism buoyed by wage growth and declining gas prices. In addition, concerns about inflation dipped to the lowest level since the beginning of the year, and optimism about the future increased as well. However, concerns about a potential recession persist among consumers, and confidence may decline if OPEC’s recent cut of oil production leads to higher gas prices again.
