(11-26-18)
Billings growth at architecture firms softened again in October, as AIA’s Architecture Billings Index score declined to 50.4, from 51.1 in September (any score over 50 indicates billing growth). Although growth is still occurring, the pace of that growth has continued to ebb and flow through much of the year. But the outlook still remains positive, as inquiries into new work remain strong, and the value of new signed design contracts remains relatively strong as well.
Regionally, conditions look to be changing from the trends that have dominated so far this year. Billings at firms in the Northeast rebounded modestly in October, following several months of softness, while billings declined at firms located in the South and West, where conditions have been strong recently. However, it is too early to say if this is a one-month blip or a more protracted change. Business conditions also softened slightly at firms with a commercial/industrial practice specialization in October, while growth continued at firms with residential and institutional specializations. Conditions in the general economy remain strong: the GDP increased by an annual rate of 3.5% in the third quarter of 2018, led by increases in personal consumption expenditures, government spending, private inventory investment, and nonresidential fixed investments. And in the latest edition of the Beige Book, the Federal Reserve reported that there is modest to moderate growth across much of the country, despite the fact that labor shortages are increasing for many industries. Nonresidential construction activity increased the Cleveland and Atlanta districts in late September and early October, while residential construction activity increased in the Atlanta and Minneapolis districts. And while real estate markets were notably weak in the St. Louis district, they remained particularly robust in the San Francisco district. Employment gains were also strong in October. Total nonfarm payroll employment grew by 250,000 new positions, with construction employment alone contributing 30,000. Architectural services employment continued to tick up in September (the most recent data available) to a total of 198,300 employees nationwide. In fact, nearly 10,000 new positions have been added to the industry in the last year.
