(06-23-21) Business conditions remained robust at architecture firms in May, as the Architecture Billings Index (ABI) score climbed even higher. The score of 58.5 for the month (any score over 50 indicates billings growth) is one of the highest ever reported, and indicates that even more firms reported an increase in their billings in May than in April. In addition, significant work remains in the pipeline, with inquiries into new projects remaining very high, and the value of new design contracts rising further to a new all-time high in the 11-year history of that index. Although comments from survey respondents indicate some concern about the impact of inflation on building costs, those fears have not yet impacted the frenetic post-pandemic pace of work at most firms. Architecture firm billings continued to expand at firms across the country in May as well, with all regions seeing billings growth for the third consecutive month. Conditions remained strongest at firms located in the Midwest, but were also robust at firms located in the sunbelt regions of the South and West. By firm specialization, firms that concentrate on commercial/industrial projects reported the strongest business conditions for the third consecutive month. Billings are also growing rapidly at firms with a multifamily residential specialization once again, following a modest decline early last winter. Inflation concerns continue – As mentioned above, inflation remains an ongoing concern. The latest data from the Bureau of Labor Statistics shows that the Producer Price Index (PPI) for final demand, a measure of inflation, increased by 0.8% in May, and is up by 6.6% from one year ago. The construction industry continues to see an even larger impact, with the PPI for materials and components for construction increasing by 3.9% in May alone, and by 17.0% from May 2020. While lumber prices have finally started to stabilize, steel prices are continuing to rise. Employment continues to grow at a steady pace though, with total nonfarm payroll employment adding 559,000 new jobs in May; that’s more than were added in April, but fewer than were added in March. Architectural services employment continued its steady rebound in April (the most recent data available), adding 1,100 new jobs, for a total of 4,100 new jobs added through the first four months of the year. Employment in the sector is now back to 2019 levels and is just 4,800 jobs below its pre-pandemic peak.
Architecture Billings Index (06-23-21)
- Architecture Billings Index, Economic Monthly Summaries
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