Architectural Billings Index Hits Two-Year High

U.S. Architecture firms saw improving business conditions for the second consecutive month in September, with billings growing at their fastest rate in two years, according to the American Institute of Architects (AIA) Architectural Billing Index (ABI).

AIA reported a September ABI score of 51.6, up from 50.2 in August. Any score above 50 indicates an increase in billings

However, conditions aren't improving in all regions. As in August, firms in the Western (53.4) and Southern (51.9) regions reported growth, while those in the Northeast (49.5) and Midwest (47.2) continued to show weaker billings.

September marked the second consecutive month of growth in the West after nearly five years of declining billings in the region.

As a leading economic indicator of construction activity, the ABI reflects the approximate nine- to 12-month lag time between architectural billings and construction spending.

Among market sectors, multi-family residential (57.3) fared best, followed by institutional (51.0), commercial / industrial (48.4) and mixed practice (47.8).

“Going back to the third quarter of 2011, the multi-family residential sector has been the best performing segment in construction,” says AIA Chief Economist, Kermit Baker. “With high foreclosure levels in recent years, more stringent mortgage approvals and fewer people in the market to buy homes,  there has been a surge in demand for rental housing. The upturn in residential activity will hopefully spur more nonresidential construction.”

Nearly half of firms (44%) responding to a special practice question indicated they intended to add staff this year. By comparison, nearly 75% of firms with annual billings of $5 million or more intend to expand staffing.