US Architecture Billings Index Soars to Seven-Year Highs

Wednesday, August 27th, 2014
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As the rebound in commercial building picks up, a key indicator of business conditions facing architects in the United States has hit its highest level in around seven years.

Published by the American Institute for Architects, the Architecture Billings Index (ABI) surged 2.5 points to go from 53.5 in June to 55.8 last month – well above the 50.0 mark separating increasing levels of billed design work from decreasing levels and higher than at any other level since 2007.

Mixed practices (61.0) fared the best, followed by multi-family residential (56.5), institutional (53.3) and commercial/industrial (51.2)

Better yet, the pace at which new work is coming in is picking up, with the sub-index for new projects coming in at a very strong 66.0.

Moreover, a new indicator the AIA has added which measures trends in new design contracts at architecture firms which it says provides a signal of future billings directions also came in at a solid 54.9.

AIA chief economist Kermit Baker welcomed the latest reading, which he said provided one of the best indications yet of improving business activity for design firms.

“Business conditions for the design and construction marketplace, and those industries associated with it, appear to be well-positioned for continued growth in the coming months,” Baker said.

“The key to a more widespread boost in design activity continues to be the institutional sector which is starting to exhibit signs of life after languishing for the better part of the last five-plus years.”

Throughout the United States, architecture practices and their staff endured a torrid time after funding for commercial building projects dried up in the wake of the global financial crisis.

In 2012 alone, for example, architecture firm revenue fell by almost 40 per cent while staff numbers were cut by almost one third, according to an AIA survey conducted at that time.

Now, however, more than half the participants in an AIA survey published in June said they expect both revenue growth and increasing merger and acquisition activity during 2014-15, and that far from cutting staff, design firms were increasingly focused on exploring alternative ways to attract and retain key talent.

Moreover, the long term future also looks promising: between 2012 and 2022, the US Labour Institute reckons the number of people employed within the profession throughout the United States will grow by 18,500, or 17 per cent.

As well as being an indicator of conditions for architects themselves, meanwhile, the ABI is also considered a reliable indicator of construction activity nine to twelve months down the track, meaning the latest readings are welcome news for builders and contractors as well as architects.

In July, the Architecture Billings Index was in positive territory across all regions, with Northeast faring the best, followed by South (55.1), Midwest (54.1) and West (53.5).

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