‘TL:DR`
While year-to-date the U.S. Stock Market is up, the AIA’s Architecture Billings Index (ABI) remains steadily down.In August business conditions at architecture firms seemed to be improving, the score of 47.2 indicated that billings were still down but at a less alarming rate than previous months. In September business conditions shifted again, rather drastically, to a score of 43.3—any score below 50 indicates a decline in billings. This is the lowest the national average has been since April’s 43.2.
Kermit Baker, the AIA’s chief economist, was honest in his assessment of September’s report.
“Unfortunately, business conditions remain relatively weak at architecture firms,” he said in a statement. “There was some erosion in project backlogs this past quarter, with the greatest slippage coming from firms with an institutional specialization.”September’s ABI reported that new project inquiries remained flat, while the value of design contracts dipped for the 19th consecutive month. Last month the AIA noted this marks “the longest decline in 15 years of data collection.”Regionally, the Midwest again fared the best, reporting a score of 49.8. The West again reported the lowest score, a weak 40.6.
When it comes to building sectors, historically, commercial/industrial projects and institutional projects have brought in strong billings for architecture firms working in those sectors. This hasn’t been the case recently: commercial/industrial reported a score of 46.6 for September and institutional, 44.3.
This sudden, increased drop in billings comes after the Federal Reserve cut interest rates in mid-September. It doesn’t seem to have made much impact. It is likely the Federal Reserve will slash interest rates two more times before the year ends, as reported by Reuters.My Thoughts 💭
This is screaming recession. More rate cuts are needed to unleash this market it seems. This first cut did little to spur growth.