More than half of architecture firms surveyed plan to add architecture positions in 2012
From AIArchitect
By Jennifer Riskus
Architecture firms reported modest growth in revenue for the fifth consecutive month in March, with an Architecture Billings Index (ABI) score of 50.4 (Any score over 50 indicates increasing firm billings). Business conditions continue to improve at firms in all regions of the country, with the exception of those in the West, where the downturn remains well entrenched.
In addition, firms with a residential specialization, as well as those with a commercial/industrial specialization, both reported increasing revenue for the seventh month in a row. Firms with a commercial/industrial specialization have reported growth in 16 out of the last 21 months, a positive sign that the expansion is well established in that sector. However, business conditions remain weak for firms with an institutional specialization, despite two months of minimal growth in late 2011 and early 2012.
Economy rising, employment still lagging
In another positive sign, more work appears to be on the horizon. Architecture firms have reported growth in the value of new design/design-build contracts for the last three months. Although this measure is not seasonally adjusted, and may be partially due to the impact of a warmer-than-average winter across much of the country, it should still be taken as an encouraging sign. The AIA’s quarterly measurements of firm backlogs reveal an average length of 4.6 months, the highest they have been since September 2008.
The general economy continued to broadcast positive signals as well, with the latest issue of the Federal Reserve’s Beige Book showing that the economy grew at a moderate pace in March, despite some concern about the impact of rising gas prices. Residential real estate activity improved in all districts of the country, with the exception of the Cleveland and San Francisco districts. Multifamily housing unit construction increased across the board. In addition, nonresidential construction activity increased in the Philadelphia, Cleveland, Richmond, Atlanta, Chicago, and St. Louis districts, and healthcare construction expanded in the Cleveland and Chicago districts.
However, employment data from the Bureau of Labor Statistics was more sobering, with non-farm payroll employment adding just 120,000 new jobs in March, half the number that had been added in each of the three prior months. One factor leading to lower numbers was a sharp decline in retail employment. Construction employment was essentially flat for the month, adding just 7,000 jobs, but the architectural services sector grew to 153,200 in February (the most recent data available) with the addition of 1,200 jobs from January. However, since this data is not seasonally adjusted, that growth may be partially due to seasonal hiring for the spring.
Looking ahead to hiring
This month panelists were asked about anticipated salary and staffing changes for 2012. Despite the fact that nearly half of the respondents, on average, expect salaries in 2012 to be unchanged from 2011, more firms anticipate increases in salaries than expect to see salary decreases for all types of architecture positions. Nearly half of firms (48 percent) anticipate that guaranteed compensation for interns on the path to licensure will increase in 2012, compared to just 12 percent who expect it to decline. Slightly fewer respondents (38 percent) report that compensation will increase for firm principals and partners, compared to nearly half that amount (20 percent) forecasting a decrease. However, more than four in 10 firms predict that salaries will rise for both licensed architects (46 percent) and nonregistered design professionals (44 percent), in contrast to the 15 percent and 13 percent, respectively, that anticipate declining salaries.
In addition, more than half of architecture firms (51 percent) plan to add positions at their firm this year, with interns and moderately experienced architects/designers (those with four to six years’ experience) being the most popular planned additions, followed by architects/designers with seven to 10 years’ experience. Students/part-time staff and managers/senior managers are the third and fourth (respectively) most popular new staff to add. Many firms that laid off their youngest staffers during the downturn have now become top-heavy, necessitating the addition of more young architects and other emerging professionals as they recover from the struggling economy. Just over 80 percent of survey panelists indicated that they do not plan to reduce staff at their firm this year, but those that do anticipate reductions are more likely to eliminate employees with the most experience: 40 percent anticipate reductions in experienced architect/designer positions.
Reference:
The ABI Work-on-the-Boards panel is open to any AIA member who is principal/partner of their firm. Apply to join the ABI panel by completing a brief background information form on your firm here.
About the AIA Architecture Billings Index
The Architecture Billings Index (ABI), produced by the AIA Economics and Market Research Group, is a leading economic indicator that provides an approximately nine- to 12-month glimpse into the future of nonresidential construction spending activity. The diffusion indexes contained in the full report are derived from a monthly “Work-on-the-Boards” survey that is sent to a panel of AIA member–owned firms. Participants are asked whether their billings increased, decreased, or stayed the same in the month that just ended, as compared to the prior month, and the results are then compiled into the ABI. These monthly results are also seasonally adjusted to allow for comparison to prior months. The monthly ABI index scores are centered near 50, with scores above 50 indicating an aggregate increase in billings, and scores below 50 indicating a decline. The regional and sector data are formulated using a three-month moving average. More information on the ABI and the analysis of its relationship to construction activity can be found in the white paper “Architecture Billings as a Leading Indicator of Construction: Analysis of the Relationship between a Billings Index and Construction Spending” on AIA.org.
