ABI August 2020: Architecture Firm Billings Still Show Little Sign of Improvement

Business conditions remained stalled at architecture firms in August, with the Architecture Billings Index recording a score of 40 for the third consecutive month, according to the American Institute of Architects. A score below 50 indicates declining firm billings. While fewer firms reported declining billings in August than during the early months of the COVID-19 pandemic, the fact that the score has been unchanged for the last three months means that the share of firms reporting increasing billings has not risen during that time, according to analysts. However, there is some reason to be optimistic when it comes to work in the pipeline: inquiries into new projects grew in August for the first time since February, and the value of new design contracts increased to a score of 46.0, indicating that fewer firms reported a decline this month, despite the fact that they remained negative overall.

Business conditions remained extremely soft at firms located in the Northeast in August, where firms had not only been experiencing a lengthy period of weakness prior to the pandemic, but were also located in the region that was hardest hit by the pandemic and subsequent recession. Billings continued to decline at firms in the rest of the country as well, but the pace of that decline has slowed from the low point in the spring. Conditions remained very weak at firms with a commercial/industrial specialization, and have stabilized modestly at firms with an institutional specialization.

In the broader economy, nonfarm payrolls added 1.4 million new positions in August, rising at a slightly slower pace of growth than in recent months, and remain 7.6 percent below the February pre-pandemic employment level. In August, 24 percent of employed persons reported that they teleworked that month specifically due to the impact of the pandemic. The most current data available on architectural services employment is from July, and unfortunately it shows that the industry shed an additional 6,000 positions from June to July, declining to total employment of 183,100, the lowest level in nearly four years. In total, the industry has lost 16,900 jobs since the beginning of the pandemic―employment is 8.5 percent below the pre-pandemic peak in February―with the greatest losses occurring in April and July.