Home > News > Industry News > ABI OCTOBER: BUSINESS CONDITIONS REMAIN STRONG

ABI OCTOBER: BUSINESS CONDITIONS REMAIN STRONG

Post Time:Nov 24,2021Classify:Industry NewsView:964

Architecture firm billings continued to rise in October, although the pace of growth decreased modestly from that of the last few months, according to the American Institute of Architects. However, the Architecture Billings Index score of 54.3 means that business conditions remain generally strong, and that most architecture firms are still seeing billings growth.


NEW INQUIRIES STRENGTHEN

In addition, inquiries and the value of new design contracts, both indicators of future work at firms, strengthened in October, meaning that clients are continuing to both start conversations about new projects and are signing contracts to begin those projects in the coming months. Although concerns about staffing, inflation, and construction material prices and availability remain, they have not yet acted as a major deterrent to projects at this time.


NORTHEAST FIRMS FACE MODEST DECLINE

By region of the country, firms located in the Northeast experienced a modest decline in billings in October, after also experiencing a slight downturn in September. Conditions at firms located in the Northeast have generally trended weaker than at firms in other regions of the country in recent years, and this month’s findings continue that pattern.


On the other hand, conditions strengthened further at firms located in the Midwest and South, while firms located in the West also reported continued growth, but at a slightly slower pace than in September. Firms with an institutional specialization also reported that the pace of billings growth slowed in October, while business conditions strengthened further at firms with multifamily residential and commercial/industrial specializations.


GROWING EMPLOYMENT NUMBERS TEMPERED BY INFLATION CONCERNS

In the broader economy, employment continues to recover from the losses sustained in 2020, with 531,000 new nonfarm payroll positions added in October, although overall employment still remains 2.8 percent below its pre-pandemic peak. Construction employment continued to expand modestly as well, adding 44,000 new positions.


Architecture services employment grew by 2,000 new positions in September (the most recent data available) to a total of 199,400 positions, finally surpassing its pre-pandemic peak of 199,200 positions. While employment for industry remains 8.4 percent below its all-time high prior to the Great Recession, this is the highest employment has been since December 2008, as employment was falling during that downturn.


However, rising inflation continues to trigger concerns, with the Consumer Price Index rising by 0.9 percent from September to October, and by a substantial 6.2 percent from one year ago. Energy and food prices have continued to increase in recent months, as have gasoline prices, but the prices of consumer goods, particularly vehicles, have seen some of the steepest increases. Wells Fargo predicts that inflation will continue rising over the next several months, and will not begin to slow until the second quarter of 2022.


FIRMS ANTICIPATE REVENUE GROWTH, MERGERS

For this month’s special practice questions, we asked responding firms to think about what their firm will look like over the next several years in several ways. Overall, firms anticipate that their revenue will grow by 5.6 percent from 2020 to 2021, and by 6.7 percent in 2022.


Larger firms expect the greatest increase in revenue in 2021 as do firms with multifamily residential and commercial/industrial specializations , in contrast to firms with an institutional specialization.

In addition, there are still firms seeing a decline in billings: 8.2 percent expect a significant decline of 15 percent or more this year, while 10.8 percent expect a modest decline of 5 percent to 14 percent.

For 2022, the largest firms project the highest increase in revenue (9.8 percent), while firms of all specializations expect about the same level of growth.

Firms were also asked about the likelihood of mergers and acquisitions at their firm over the next three to five years.


Overall, a slightly larger share of firms expects that their firm will acquire another firm, as opposed to merging with or being acquired by another firm, with large firms with annual billings of $5 million or more being most likely to expect that they will acquire another firm.

On the other hand, firms with annual billings of $250,000 to $5 million were the most likely to anticipate being acquired by, or merging with, another firm.

Finally, firms were asked about the share of leadership at their firm that is expected to retire/significantly scale back involvement in the firm over the next three to five years, an ongoing concern as the baby boomers continue to age.


Responding firms indicated that overall, they expect nearly one fifth of their firm’s leadership to retire in the next three to five years, with small firms reporting that they expect 28 percent of firm leaders to retire.

However, nearly one third of firms indicated that they do not expect any leaders to step back during that time period, while on the other hand, 17 percent indicated that they expect at least half of leadership to retire within the next five years.

Source: https://www.glassmagazine.com/Author: shangyi

Hot News

返回顶部