Business conditions at architecture firms entering 2022 were essentially the same as when they ended 2021, with an Architecture Billings Index score of 51.0 in January, the same as the revised December score—any score over 50 indicates billings growth. The ABI is compiled by the American Institute of Architects.
This makes 12 straight months of positive readings for the ABI. However, over this period the pace of growth of the ABI has clearly moderated. For the first nine months of this design recovery, the average ABI score was almost 56, an unusually high level for such an extended period. Over the past three months, the average score was barely over 51. This more modest growth in the ABI no doubt reflect challenges in the construction sector—supply challenges for both labor and materials—as well as ongoing staffing constraints at architecture firms.
In spite of this moderation in ABI scores, workloads at architecture firms should continue to be robust. New project inquiries remain very strong, and new design projects continue to come into architecture firms at a healthy pace. The monthly new design contracts score has exceeded the billings score at firms in ten of the 12 months since the design upturn got underway, suggesting that project backlogs at firms continue to grow. This expanding backlog will serve as a cushion to ensure healthy future workloads over the coming quarters.
Despite these healthy workloads, there remains considerable variation in business conditions geographically and by firm specialization. Firms in the Northeast continue to see the weakest conditions, reporting five straight monthly declines in billings. Firms in the West are also reporting billings declines in recent months. Firms in the South, however, are reporting accelerating growth in billings activity, and in January saw their strongest monthly increase in billings since well before the Great Recession. Likewise with firm specialization, firms focusing on the commercial/industrial market are seeing billings accelerate, institutional firms are reporting billing declines, while multifamily residential firms are reporting stable business conditions.
