Architecture Billings Index falls in June with weakness expected to persist: UBS

Demand for architectural design services continued to decline in June, with the Architecture Billings Index slipping to 46.8 from 47.2 in May. A score below 50 indicates a contraction in billings, signaling that business conditions remain soft for the architecture industry.

The index, compiled by the American Institute of Architects, reflects trends in non-residential construction activity based on survey data from architectural firms. Inquiries for new projects remained in positive territory at 53.6, while design contracts edged up slightly to 46.0.

While most segments showed sluggish performance, there were some bright spots. The Commercial & Industrial category improved to 47.4, its highest reading since November 2023, and Institutional billings strengthened to 49.2 from 46.2. Multifamily Residential, however, continued to weaken, falling to 43.8. Regional performance was also mixed, with the South emerging as the only area reporting growth at 50.6.

“Business conditions were soft nationwide in June, with a slight billing increase in the South for the first time since October,” noted AIA Chief Economist Kermit Baker. “Multifamily firms faced the weakest conditions, with further declines.”

UBS expects a near-term slowdown in non-residential construction including electric-vehicle-related projects, followed by a rebound starting in the second half of 2026, equity analyst Steven Fisher said in a July 23 note to clients.

The bank projects spending in the sector will grow just 0.8% in 2025 before accelerating to 4.0% in 2026, led by large-scale investments in infrastructure, data centers, life sciences and power.

While the broader construction outlook remains murky, UBS reiterated a Buy rating on Oshkosh (NYSE:OSK), citing company-specific drivers. Among the firms most exposed to U.S. construction trends are equipment makers like Caterpillar (NYSE:CAT), rental operators like United Rentals (URI), engineering and construction firms such as Fluor (FLR) and Jacobs (J), and building materials providers like CRH and Vulcan Materials (VMC).