Business conditions continue to soften, according to the AIA/Deltek Architecture Billings Index. The ABI score dropped to 44.3, with declines reported in all regions, although at a slower pace in the Midwest and South. Firms specializing in commercial/industrial (43.7) and multifamily residential (40.1) projects saw billings drop further, while those for institutional (49.1) dipped moderately from last month’s score of 50.1. On average, architecture firms project net revenue to essentially remain flat in 2023 with a slight decline in 2024. Larger firms look to be less impacted than smaller firms, with revenue growth also more likely for those specializing in institutional projects.

Despite the uncertainty, there is some positive news for the industry. A recent survey by the Architectural Woodwork Institute saw gains in gross profits and contribution margins for all firms in 2023. Operating income also rose compared to 2022 figures, as noted in the annual AWI Cost of Doing Business Survey (see chart below). Slightly more than half (53%) also said they planned to invest more than $100,000 in the next six months, up from 42% responding in 2022.

Click on the infographic to enlarge. Find more market data in the December 2023 FDMC Wood Industry Almanac.

Quick Stats (Includes items not shown in print.)
• The Q4 2023 Houzz Renovation Barometer reveals sentiment in the architectural and design sectors is positive, with the Q4 Expected Business Activity Indicator up 9 points to 61. The Project Backlog Indicator decreased to 6.1 weeks, and the Recent Business Activity Indicator grew 9 points to 52 in Q3. Within the construction sector, the Expected Business Activity Indicator dropped 7 points from Q3 to 47, while the Project Backlog Indicator was 11.4 weeks. The Recent Business Activity Indicator rose 1 point to 44.

• The Architectural Woodwork Institute announced it will revise ANSI/AWI 0620-2018 for Finish Carpentry/Installation. Also in the works are three proposed draft standards: AWI 0642: Wood Paneling; AWI 1235: Specialty Casework; and AWI 0622.0646: Millwork & Wood Trim.

• Sustainability in selecting products for the kitchen is being driven by homeowners, manufacturers and designers, the NKBA/KBIS 2024 Kitchen Trends report reveals.

• The median spend for home renovations in 2022 was $22,000; the median for higher-budget projects (with the top 10% of spend) reached $140,000 or more, according to the 2023 Houzz & Home study.

Market Data Sources: Architectural Woodwork Institute (AWI), The American Institute of Architects (AIA), Houzz, Architectural Woodwork Manufacturers Association of Canada, National Kitchen & Bath Assn. (NKBA), AIA/Deltek/ABI. Category: Architectural & Custom includes: commercial & residential interior millwork, architectural woodwork, casework & cabinetry.

More data on North American woodworking and the specific wood product market segments can be found in the December 2023 FDMC Wood Industry Almanac. Also, find market data year-round at WoodworkingNetwork.com/news/almanac-market-data.