Two architectural teachers discuss the student’s final project work.
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Construction companies are reporting a decline in Billings as wider economic and tariff concerns affect commercial property development and spending.
The AIA/Deltek Architecture Billings Index (ABI) remained in negative territory in June with a score of 47.2 to 46.8 in May. Anything below 50 is considered a negative emotion.
“Business conditions were soft in June, with a slight increase in the South for the first time since October,” says Kermit Baker, AIA’s chief economist at the Institute of Architects. “Other regions saw a decline in bills, but the pace was slower. All specialisations experienced softer billing, but the decline in commercial/industrial and institutional companies was slower. Multifamily companies faced the weakest state with further declines.”
One bright spot was enquiries for a new project. This has increased for the second straight month, growing at its strongest pace, with a score of 53.6 since last fall. This suggests that clients are beginning to send requests for proposals and will begin working with the construction company on potential projects.
AIA notes that these inquiries are not necessarily converted to actual projects. The value of the newly signed design contract has also declined for the 16th consecutive month. Billings is unlikely to improve the value of these new design contracts until they see the benefits.
AIA also made forecasts for the middle of the year.
Firstly, good news: Despite stubbornly high long-term interest rates, inflation rates exceeded the Fed’s goals, with lower consumer confidence scores, disappointment levels in housing construction activities, rising tariff rates on many inputs to construction, and restrictive immigration policies exacerbated by construction labor shortages, with the 2026 outlook.
Bad news: The outlook for spending into the year has been extremely pessimistic.
AIA forecasts that overall spending on non-resident buildings that are not adjusted for inflation will only increase by 1.7% this year, and will rise slightly to just 2% next year.
Expenses on construction of manufacturing facilities, which have been a bright spot in recent years, have fallen by 2% this year, with an additional 2.6% drop next year. The institutional facilities are expected to become the strongest sector in 2026, with a forecast profit of 6.1% this year and an additional 3.8%.
In addition to slowing the economy, uncertain and ever-changing tariff policies have created a growing uncertainty for the architects, engineers and the construction services industry.
“What products will cost in the future, whether they will become available, how these changes will affect the supply chain, and whether they will cause a trade war with exporters are questions that the AEC industry is asking before moving forward with planned projects,” the report said.
