ABI June 2025: Architecture firm billings remain soft, while inquiries increase

Architecture firm billings declined for the eighth consecutive month in June

The AIA/Deltek Architecture Billings Index score was 46.8 for the month, indicating that the majority of architecture firms are still experiencing a decline in their billings. However, inquiries into new projects increased for the second consecutive month and grew at the strongest pace since last fall. This means that clients are starting to send out RFPs and initiate conversations with architecture firms about potential projects after a lull since mid-winter. However, these inquiries do not necessarily translate into actual projects, as the value of newly signed design contracts declined for the 16th consecutive month in June. It is unlikely that firm billings will return to positive territory until the value of new design contracts also starts to increase again.

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Business conditions remained generally soft across the country in June, although firms located in the South reported a very slight increase in billings for the first time since last October. Firms in all other regions experienced a decline in billings, with the pace of the decline slowing modestly. Firms of all specializations also saw billings soften further in June, although the pace of the billings decline continued to slow at firms with commercial/industrial and institutional specializations. However, conditions remained weakest at firms with a multifamily specialization, where billings declined further this month.

Inflation rises again

Conditions in the broader economy were somewhat mixed in June. Nonfarm payroll employment added 147,000 new jobs, in line with average monthly gains over the past 12 months. Architectural services employment was essentially flat in May (the most recent data available), shedding 100 jobs from April. Employment in the industry has fluctuated this year, but it has still added a net gain of 300 jobs since January.

And while inflation had generally been trending down in recent months, it ticked back up in June. The Consumer Price Index (CPI) increased by 0.3% from May to June, while it grew just 0.1% from April to May. The average annual increase now stands at 2.7%, the highest level since February. Increases in shelter, energy (particularly gas), and food prices contributed to the increase this month, despite decreases in transportation and travel costs.

Staffing issues remain at more than one-third of architecture firms

This month, we asked firm leaders about current staffing levels at their firms. Overall, nearly three-quarters of responding firm leaders (64%) reported that their firm is currently appropriately staffed with architecture staff. Almost one quarter (24%) said that they are currently understaffed, while just 12% said that they are currently overstaffed. Firms located in the South (32%), with an institutional specialization (30%), and with annual billings of $1 million or more (29%) were most likely to report being understaffed. Large firms with annual billings of $5 million or more were also most likely to report being overstaffed (18%). Firms with a multifamily residential specialization were also far more likely to report being overstaffed than firms of other specializations (20%, versus 10% of firms with a commercial/industrial specialization and 8% of firms with an institutional specialization).

On average, firms that indicated that they are currently understaffed reported that they are understaffed by a median of 15% of their current total architecture staff. This share was highest at firms located in the Northeast (20%) and lowest for firms located in the Midwest, which reported being understaffed by a median of just 10% of their current total staff. Smaller firms also reported being significantly more understaffed than larger firms, with firms with annual billings of $500,000 to $1 million being understaffed by a median of 30% and firms with annual billings of $1 to $5 million being understaffed by a median of 20%, versus just 9% for firms with annual billings of more than $5 million. Firms with a commercial/industrial specialization also reported being significantly more understaffed than those with institutional and multifamily residential specializations (20% versus 14% and 13%, respectively).

Firms that indicated that they are overstaffed reported being overstaffed by a median of 10% of their current total architecture staff. Firms located in the West reported being slightly more overstaffed, by a median of 13%. Firms with annual billings of $1 to 5 million also reported being overstaffed by a median of 14%, versus 10% for firms with annual billings of more than $5 million.

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This month, Work-on-the-Boards participants are saying:

• “We are seeing fewer opportunities, and more people competing for those opportunities. Clients seeking financing are having trouble closing deals, and those who have financing are pretty risk-averse – they want assurance that projects will meet their budgets.”—18-person firm in the Northeast, residential specialization
• “Things are still stagnant, we're getting enough work to survive, but just getting by.”—20-person firm in the South, commercial/industrial specialization
• “Lots of opportunities related to public school work.”—35-person firm in the West, institutional specialization
• “Solid with a big push toward World Cup 2026 completions but, we'll see how things fall off in the next 3-6 months in the Kansas City metro area.”—5-person firm in the Midwest, mixed specialization