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April ABI Strengthens, While Industry Faces Ongoing Supply Issues

Business conditions at architecture firms continued to rebound at a strong clip in April, with the American Institute of Architect’s Architecture Billings Index score rising to 57.9 for the month―any score over 50 indicates billings growth. This is the highest ABI score since prior to the Great Recession, and indicates that a majority of architecture firms saw their billings increase this month.

Interest in new projects remained extremely strong as well, with the Inquiries score rising to 70.8, and the value of new signed design contracts reaching 61.7, the highest score in that index since data collection started in late 2010. This means that not only are clients talking to architecture firms about starting new projects, but that they are also signing contracts to begin that work at a high rate.

Billings increase for firms across regions, specialties

Architecture firms in all regions of the country also reported increasing billings for the second consecutive month in April, with firms located in the Midwest and South reporting the strongest growth. While growth remains somewhat more modest at firms located in the West, they are still seeing their strongest conditions in nearly three years.

In addition, firms of all specializations reported growth again this month, with firms with a commercial/industrial specialization seeing the largest increase in billings for the second month in a row. Business conditions also continued to rebound at firms with a multifamily residential specialization, after they saw a modest decline over the winter.

Supply constraints contribute to inflation

While the broader U.S. economy also continues to rebound from last year’s recession, some new signs of concern have emerged recently. Most notable is the recent increase in the Department of Labor’s Consumer Price Index, which measures inflation in the prices of consumer goods. The CPI was up 0.8 percent from March to April, and 4.2 percent from April 2020 to April 2021, the largest increases for both measures since the Great Recession. In addition, core inflation rose by 0.9 percent in April, the largest increase in that indicator since 1981. Rising consumer prices at this time are largely caused by supply constraints due to a shortage of key inputs subsequently leading to production delays, and by rising demands for services, particularly travel and hospitality.

In addition, nonfarm payroll employment added just 266,000 positions in April, well below the gains seen in the previous two months, and indicative of concerns staffing up businesses to meet reemerging demand. However, architectural services employment has continued to grow at a steady clip, with 2,400 new jobs added in March, the most recent data available. This is the largest monthly increase since last September, and brings total employment in the industry to 193,400, just 3 percent below the pre-pandemic peak of 199,200.

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