A Drop in Demand for Design Services?

07/18/2012 |

Will the design market recover after the summer slump?

The Architecture Billings Index (ABI) saw more poor conditions in June, indicating a drop in design activity at U.S. architecture firms, and suggesting upcoming weakness in spending on nonresidential construction projects.

As a leading economic indicator of construction activity, the ABI reflects the approximate nine to twelve month lag time between architecture billings and construction spending. The American Institute of Architects (AIA) reported the June ABI score was 45.9, nearly identical to the mark of 45.8 in May. This score reflects a decrease in demand for design services (any score above 50 indicates an increase in billings). The new projects inquiry index was 54.4, up slightly from mark of 54.0 the previous month.

“The downturn in design activity that began in April and accelerated in May has continued into June, likely extending the weak market conditions we’ve seen in nonresidential building activity ,” says AIA Chief Economist, Kermit Baker, PhD, Hon. AIA.  “While not all firms are experiencing negative conditions, a large share is still coping with a sluggish and erratic marketplace.”

Will the weak market conditions persist moving into the summer months?

June 2012 Key ABI Highlights:

Regional averages: Midwest (48.0), South (47.6), Northeast (46.4), West (44.3)

Sector index breakdown: multi-family residential (49.0), commercial / industrial (46.9), institutional (46.0), mixed practice (45.9)

Project inquiries index: 54.4

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