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Architecture Firms Continue to Report Modest Billings Growth


Architecture firm billings continued to grow at a modest pace in June. After a burst of stronger growth in the spring, the pace has returned to more modest territory over the last two months, with a score of 53.2 for June (any score over 50 indicates billings growth). However, still-rising inflation, as well as higher interest rates and a continued shortage of certain building and construction materials, means that the future is looking increasingly cloudy. While inquiries into new projects continued to grow at a steady pace in June, it was the slowest rate of growth since the recovery began in early 2021. In addition, the value of new signed design contracts also fell to the slowest pace of growth since January 2021. And backlogs at firms, which had been growing at a torrid pace recently, declined slightly, from an average of 7.2 months at the end of the first quarter of 2022, to an average of 7.0 months at the end of the second quarter. However, these are still extremely strong backlogs, meaning that most firms still have a robust supply of work in the pipeline.

    

Business conditions remained mixed in different areas of the country in June, as they have for much of the year so far. Following two months of modest growth, firm billings declined slightly at firms located in the Northeast in June. And the pace of growth at firms in the South slowed further, after seeing the strongest growth earlier this year. Business conditions were strongest at firms located in the West for the third month in a row, and were also strong at firms located in the Midwest. By firm specialization, firms with an institutional specialization reported the strongest growth for the first time since before the pandemic. The majority of firms with multifamily residential and commercial/industrial specializations also saw an increase in their billings, but the pace of that growth continued to slow at both.

    

Inflation remained a key concern in the broader economy in June, with the Consumer Price Index (CPI) increasing by 1.3% from May, for an increase of a whopping 9.1% from one year ago. In addition, core inflation, which had projected to start moderating, increased by an additional 0.7%, for an increase of 5.9% from June 2021.


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