(06-20-18)
Business conditions at architecture firms remained strong in May, with an Architecture Billings Index (ABI) score of 52.8 (any score over 50 indicates billings growth). Slightly more firms reported an increase in firm billings than in April, and May also marked the eighth consecutive month of billings growth. Inquiries into new projects and value of new design contracts also continued to grow at a steady pace, indicating ongoing interest from clients in starting new projects.
In addition, architecture firms in all regions of the country reported an increase in billings in May. Firms located in the Northeast reported modest growth for the second month in a row, following four months of declining billings, while firms located in the South continued to report particularly robust growth. Business conditions also remained strong at firms of all specializations, but particularly at those with an institutional or commercial/industrial specialization. As had been expected, the Federal Reserve raised the target range for federal funds to 2 percent in mid-June, with at least one more increase anticipated before the end of the year. The June increase was prompted by the strengthening labor market, increased household spending, and strong growth in business fixed investment, among other factors. The Federal Reserve also released the latest version of their Beige Book report on May 30, which also showed a moderate expansion in economic activity across the country. Homebuilding and home sales were reported to have increased modestly in April and May, and nonresidential construction increased as well. Commercial real estate strengthened in the San Francisco district but softened in the New York district, while construction activity remained generally robust in the Cleveland district. Nonfarm payroll growth continued in May, with 223,000 new positions added, bringing average monthly gains over the last 12 months to 191,000. Construction payrolls grew by 25,000 positions in May, for a total of 286,000 over the last year, while architectural services employment added 1,500 new positions in April (the most recent data available) for a total of 7,300 over the last year.