Business Conditions at Architecture Firms Making Progress

 

The 3 point gain of billings in October coming on top of a 1.4 point gain in September provides hope that the profession may begin to see an occasional month or two of growing revenue (index scores above 50 indicate growth) over the next three to six months.

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Most firms see 2010 as another challenging year, according to Kermit Baker, PhD, Hon. AIA Chief Economist. U.S. architecture firms reported progress toward an eventual recovery in October, as the AIA’s Architecture Billings Index moved up three points to 46.1. This reading is the strongest since the serious problems in the financial sector emerged in late summer 2008 and points to further improvement in the index in the months ahead. Inquiries for new project activity remained strong.

Firms report that business conditions in all regions of the country are roughly comparable, while those that specialize in the institutional sector have reported the sharpest gains of the sector-specific billing indexes in recent months.

ABI has remained remarkably stable for the past seven months, reflecting continued slow deterioration in business conditions at architecture firms. Growing levels of inquiries for new projects provide more optimism that new project activity is beginning to materialize. The project inquiry index has pointed to gains for the past eight months.

The past two months have shown inquiries growth generally associated with a healthy design profession. The fact that growing inquiries have not yet translated into increased revenue probably reflects that a larger number of firms are reporting inquiries from the same project.

By sector, the firms with an institutional specialization have reported the most improvement recently, with index scores that have increased by more than 10 points over the past three months. Index scores for firms with a commercial/industrial specialization have begun to stall after sharp improvement earlier this year. Scores for residential firms have been slowly improving. These scores give landscape architects ideas of what sectors have the best potential for growth next year.

– Courtesy of AIA