Firms Cautious About Improvement

 

Given the uncertainty in the economy and the slow recovery in design activity, architecture firms are reasonably pessimistic about the outlook for 2011.
Courtesy of AIA

AIA recently began collecting information on trends in newly signed design contracts, anticipating that this will serve as a leading indicator for future design billings. In November, fewer firms reported an increase in newly signed design contracts than reported an increase in billings, so workloads at architecture firms are not likely to begin to accelerate in the months ahead, according to Kermit Baker, Hon. AIA Chief Economist.

Consumer sentiment numbers have been largely flat this year. As a result, there have been only modest gains in consumer spending. Retail sales have increased at about a 6 percent pace through the first 10 months of the year. However, these gains may be somewhat better than they appear to be, since inflation is running at only about 1.5 percent compared to year-ago levels.

Overall revenue growth is projected to average in the 2 to 3 percent range, but almost one in three firms expect revenue for 2011 to be below 2010 levels. Over half of these firms expect the falloff to be 10 percent or more. Still, well over four in 10 firms expect to see growth this coming year. The remaining quarter anticipated that 2011 will be comparable to 2010.

– Courtesy of AIA