After an encouraging uptick in August, the American Institute of Architects' Architecture Billings Index retreated again in September, falling to a score of 46.9. Since any score below 50 indicates a decline in billings at architecture firms, this was the fifth of the past six months in which business conditions have deteriorated.

Additionally, backlogs at architecture firms—the amount of project activity in-house at present—dropped to 4.2 months on average in the third quarter, meaning that firms could keep current staff employed for 4.2 months without any new projects. This rate is down from 4.4 months at the end of the second quarter.

Lower levels of project backlogs, coupled with less encouraging levels of new project inquiries in September, point to continued concern for architecture firms in the coming months.

Even with the national downturn in billings in September, some regions reported improvement. Regional billings scores are computed as rolling three-month moving averages, and recent numbers showed enough strength to boost scores for firms in the Northeast and Midwest into positive territory. Scores for firms in the South and West continued to show relatively steep declines.

Likewise, commercial/industrial firms reported reasonably healthy improvement in September, while residential firms and institutional firms were showing continued weakness. Commercial/industrial firms reported nine straight months of billings gains from mid-2010 through the first quarter of 2011, so there are grounds for optimism for firms in that sector.

Economy remains in slow gear

The broader economy continues to show only modest growth. Just over 100,000 jobs were added in September, bringing the total added for the first nine months of the year to just over 1 million. That is well below the number required to generate healthy growth in the economy, and, as such, the national unemployment rate is up from 9.0 percent in January to 9.1 percent in September.

Construction employment saw an increase of 26,000 positions in September, the second strongest number of the year. However, only 53,000 positions have been added in this sector since the beginning of the year, equating to fewer than 6,000 per month. Architecture firms have added only 1,200 positions since January, to a current work force of just over 153,000 in August, the most recent figures available.

Employment at U.S. architecture firms peaked during the summer of 2008 and exhibited steady declines for the next two years. For the past 12 to 15 months, employment levels have been bouncing around this bottom rung.

This prolonged downturn has meant that many architects who were downsized at the beginning of the economic crash have been waiting a long time for a recovery. Participants in a recent AIA Work-on-the-Boards panel were asked to comment on the current status of these downsized architectural staff.

Many who lost positions either have returned to their original firms, gone to other firms, or started their own architectural practices.

However, those not currently working full time in the profession are in a diverse set of situations.

Based on these estimates, about 30 percent of previously full-time employees who lost their positions still are working in the architecture profession, but are underemployed and working on a part-time or contract basis. These are likely the first people who would return to full-time status once design activity shows a more significant rebound.

Well over a third of downsized employees currently are out of the profession, but waiting for business to pick up to return to architecture positions. This includes about 18 percent who are working in other jobs, but waiting for architecture positions to open up, and almost as many who aren't working, but are waiting for architecture positions to open up.

However, this leaves a significant number of former employees who aren't expected to return to the profession at all.

Around 9 percent are retired or not looking for work for other reasons. More than 12 percent are working in other jobs and are unlikely to return even when architecture positions open up. Nearly 6 percent aren't currently working, but are unlikely to return to architecture even when the economy improves and positions open.