T
he Architecture Billings Index (ABI) has shown signs of stabilization after a prolonged decline, with the November 2024 score hovering near 50. This reflects an almost equal split between firms reporting increases and decreases in billings, indicating a shift from nearly two years of declining billings to a flat trajectory. While growth remains elusive for most firms, inquiries for new work continue to rise steadily.

    Regional trends suggest improvement, with the West and South experiencing business conditions that are improving, including robust growth in the West. The Northeast and Midwest saw continued declines, but at a slower pace. Multifamily residential firms reported their first increase in billings since August 2022, while institutional firms also saw a second consecutive month of rising billings.

    The broader economy is showing signs of recovery, with nonfarm payrolls adding 227,000 jobs in November. However, architecture services employment lagged, shedding 100 jobs in October. Inflation remains a concern, ticking upward in November due to gas and grocery prices, but the Federal Reserve is likely to lower interest rates by 0.25 percentage points at its December meeting.

    Architecture firms are prioritizing profitability for 2025, with one-third of leaders citing it as their top concern - the highest share since 2017. Negotiating project fees and identifying new clients/markets were also key concerns. Staffing challenges remain a priority but have eased compared to 2024, while financing concerns have declined significantly.

    Lower-priority issues for firms in 2025 include managing mergers and acquisitions, increasing post-construction services, addressing post-pandemic design needs, reducing staffing costs, and managing a hybrid workforce.