TL:DR
The AIA/Deltek Architecture Billings Index ® (ABI) was 46.6 in July. This number is down from June, which had a score of 47.3.
The AIA said the downturn signals a “modest decline” thanks in part to high oil prices and inflation. AIA chief economist Richard Branch attributed the dip to “macroeconomic uncertainty” that “continues to weigh on the built environment.”
“High oil prices are putting upward pressure on inflation and may lead to even higher rates in the back half of the year,” Branch said. “This will put additional pressure on developers and may lead to a further weakening in billings.”
Business conditions have been negative for almost four years now, the AIA affirmed. This is the longest slump in the ABI’s history, since it began in 1995.
Still, inquiries for new projects were up, again, in July although at a slower pace than in June.
The project inquiries index number was 52.6. And the value of newly signed design contracts fell further: It was 47.2 this month.
Firms in the Northeast saw the weakest conditions, now for the second straight month. The other three regions “saw the pace of decline ease slightly.”
‘In July the South fared the best of the four regions; ` it had a score of 48.7. The West scored 47.8; the Midwest, 46.7; and the Northeast, 44.8.
Billings in every specialization fell, according to the latest Architecture Billings Index. Firms that specialize in multifamily residential had a score of 48.7; institutional firms, 47.4; commercial and industrial firms, 46.7; and mixed practices, 43.2.
High interest rates and the conflict in Iran are factors taking a toll.
What comes next? Likely more of the same “macroeconomic uncertainty.”
The Federal Reserve announced this weekinterest rates will remain the same through the end of the year.
And with the 60-day deadline for a deal with Iran having just expired, and daily jostling about the Strait of Hormuz, some commentators expect for these conditions to continue.