(10-27-18)
Firm revenue remains robust but is projected to slow in 2019 – Business conditions remained generally positive at architecture firms in September, with the Architecture Billings Index (ABI) showing another month of growth in firm billings. Although the pace of billings growth slowed somewhat from August, billings have remained positive for the entire year so far, indicative of generally strong conditions at firms. The value of new signed design contracts increased in September as well, after a modest decline in August, and inquiries into new projects remained strong.
Firms also continued to report very strong project backlogs, currently averaging just over six months. Mirroring conditions nationally, architecture firms located in the Midwest and South regions of the country continued to report very strong billings in September. Business conditions have also been strengthening at firms located in the West over the last few months. On the other hand, billings remained very soft at firms located in the Northeast, where they have declined or been flat for the entire year so far. Architecture firms of all specializations reported increasing firm billings in September, with those with a residential or institutional specialization reporting particularly strong billings. Business conditions have softened somewhat in recent months at firms with a commercial/industrial specialization but remain positive overall. Conditions remained positive in the broader economy as well in September. Nonfarm payroll employment grew by 134,000 new jobs for the month and, while below the average monthly gains of 201,000 for the previous 12 months, both construction employment and architecture services employment have continued to grow in recent months. Architecture services employment grew to a seasonally adjusted total of 197,900 positions in August—the most recent data available—as the industry has now regained 45,900 of the 65,800 jobs that were lost during the economic downturn. Consumer confidence is also strong, as the Consumer Confidence Index increased in September on the heels of particularly strong growth in August. It is now approaching its all-time high from 2000. The share of consumers reporting good business conditions increased for the month, and their short-term outlook improved as well. The only negative aspect was that the share of consumers reporting that jobs are “hard to get” increased, but it remains relatively low overall.