Architecture firms are billing less, and that’s an early warning for construction. The AIA/Deltek Architecture Billings Index fell to 44.5 in May, its lowest reading since January. Anything under 50 means firm billings shrank from the month before, and May was no fluke. The value of newly signed design contracts dropped to its own year-to-date low, and the inquiries index slipped below 50 for the first time in four months.
Reading the leading indicator
The ABI matters because design work precedes construction by roughly nine to twelve months. When billings sag, it’s a signal that the project starts feeding contractors next year may thin out. The May data points to clients hesitating: pausing new commitments, slowing decisions, waiting out the uncertainty rather than committing capital.
AIA tied much of the softness to broader economic jitters, including higher energy prices and inflation pressure that pushed some owners to delay. Sentiment reflects it. At the end of the first quarter, 21% of firm leaders expected billings to fall 5% or more in the second quarter. Now a full quarter of them expect a third-quarter decline.
Where the weakness sits
The sector breakdown is the useful part. Multifamily residential scored 49.2, close to flat. Institutional came in at 46.9, commercial and industrial at 45.5, and mixed-practice firms at 44.1. None are in growth territory, but the spread tells you where the hesitation is concentrated. Commercial and industrial clients, the ones who move first when rates and demand wobble, are pulling back hardest.
Staffing hasn’t cracked yet. Most firm leaders, 62%, still call themselves appropriately staffed, with more reporting overstaffing than a year ago. That’s the number to track. If billings stay below 50 through the summer, layoffs usually follow, and that ripples into the construction labor picture by next spring. For now, the design economy is cooling, not collapsing.