(03-24-21) Architecture firm billings returned to the positive side in February for the first time in a year, with the AIA’s Architecture Billings Index (ABI) score climbing by more than eight points from January to a score of 53.3. Hopefully, this is the start of a more sustained recovery, however, it is possible that scores continue to bounce above and below 50 for the next few months, as recoveries often move in fits and starts. Indicators of future work also returned to the positive side this month, with inquiries climbing above 60 for the first time in nearly two years, and the value of new design contracts returning to growth for the first time since February 2020. All of these indicators are encouraging signs that business is beginning to return to many firms that had been struggling, and should continue to improve as the pace of vaccinations accelerates and the impact of the latest government stimulus continues to spread. Firms located in the South region of the country reported billings growth for the second consecutive month in February, while firms located in the West and Midwest saw only small declines, and look likely to return to growth soon themselves. Conditions remained softest at firms located in the Northeast, but the pace of the decline in firm billings slowed for the third month in a row. And firms with a commercial/industrial specialization, among the hardest hit by the pandemic, reported a very modest improvement in their business conditions this month, as industrial activity remains strong, and some restaurants and stores began to reopen. In addition, the pace of the decline in billings slowed at both multifamily residential and institutional firms. Encouraging signs in architecture and the broader economy – Conditions continued to improve across much of the broader economy in February as well. Nonfarm payroll employment grew by 379,000 new positions, with employment in leisure and hospitality adding 355,000 positions alone. However, construction employment declined by 61,000 positions, likely due to the severe winter weather across much of the country. Architecture services employment added 700 new positions in January (the most recent data available), and has now regained 45% of the jobs that were lost during the pandemic. Overall, the architecture industry is faring modestly better in their recovery than overall national employment – employment for the sector is currently 4.4% below its pre-pandemic peak, while national employment is still down by 6.2%. The University of Michigan’s Index of Consumer Sentiment also showed encouraging signs in its latest release in early March, rising to its highest level in a year. Although the index is still 6.8% below its level a year ago, consumer optimism about prospects for the national economy increased, and strong growth in consumer spending is expected in the months ahead. The one lingering issue is personal finances, where ongoing consumer concern did not improve in this release.
Architecture Billings Index (03-24-21)
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