Architecture firms continued to report strong business conditions in September. The ABI score rose by a point from August to 56.6, one of the higher scores seen this year. The ABI scores over the last eight months continue to be among the highest ever seen in the immediate post-recession periods that have been captured throughout the index’s history, underscoring just how strong the bounce back has been this year following the abrupt downturn in 2020. Firms continue to report plenty of work in the pipeline as well, with inquiries into new projects and the value of new design contracts remaining strong. In addition, backlogs at architecture firms reached a new high since we started collecting the data on a quarterly basis in late 2010, now averaging 6.6 months.
Firm billings remained strongest at firms located in the Midwest in September, and business conditions also strengthened further at firms located in the South. Billings growth continued to soften at firms located in the Northeast, but remained positive overall. Firms with a commercial/industrial specialization reported the strongest billings for the eighth consecutive month, although business conditions remain robust at firms with multifamily residential and institutional specializations as well.
In the broader economy, employment growth slowed in September, with nonfarm payrolls adding just 194,000 new jobs, far below the average monthly gains of 561,000 for the year so far. However, architectural services employment continued to rebound in August (the most recent data available), adding a substantial 1,700 new positions. Architectural services employment is now just 1% below its pre-pandemic peak, while overall national employment is still 3% below its peak.
However, there remain concerns about inflation, which has continued to rise in recent months. The latest Consumer Price Index data shows that inflation rose by 0.4% in September, and is now up by 5.4% from September 2020. This month’s increase was led by rising costs for many consumer basics, such as energy, food at and away from home, and housing. And energy prices in particular are expected to continue increasing over the coming months, as is inflation in general, as supply chain and inventory issues linger.
