U.S. architecture firms offered a small sign of hope for the economy as they billed clients for more work in May in the first monthly increase since last year, buoyed by institutional projects.

The billings score of invoices from architects and designers rose to 51 in May from 48.5 in April in its first gain since September 2022, according to the monthly index from the American Institute of Architects and its partner firm, Deltek. A score higher than 50 equates to more monthly billings in the index, a closely watched indicator of nonresidential construction.

Rising interest rates and inflation have led to concerns about a U.S. recession later this year, making some developers and lenders hesitant to invest in commercial real estate. While the most recent increase in architectural billings was modest, it suggests possible economic improvement for design firms for the remainder of 2023, said Kermit Baker, the AIA’s chief economist.

“The overall demand for architectural services that we saw last month is encouraging news,” Baker said in a statement. “However, there continues to be variation in the performance of firms by regional location and building specialization. This suggests that overall business conditions for the profession likely will continue to be variable."

The pace of new inquiries submitted to architecture firms rose in May to an index score of 57.2 from 53.9 the previous month, while the value of new design contracts increased to 52.3 from 49.8 in April. The AIA and Deltek don't track the total dollar amount of billings, which are typically made upon a project's completion.

Certain project types and geographic regions posted the best results, according to the AIA and Deltek. Projects for hospitals, schools, museums and government agencies — classified by the AIA as institutional property — recorded an index score of 53.4, representing their strongest growth since last year.

Some recently completed major institutional projects include the Arkansas Museum of Fine Arts in Little Rock designed by Studio Gang; and the Far Rockaway Writers’ Library in Queens, New York, designed by Snohetta.

Still, the multifamily segment remained a weak spot for architects, as the category posted an index score of 43, its lowest in two years. Billings also declined for the ninth consecutive month at firms with a commercial and industrial specialization.

Overall billings improved at firms in the South in May for the second consecutive month, with a score of 52.3. But billings were essentially flat at firms in the Midwest after six months of growth.

Billings fell further at firms in the West and Northeast, where scores have been below 50 since last fall.

“The work is still out there, it’s just taking more effort to get the work," an unidentified architectural firm specializing in multifamily in the West with 22 employees told the AIA. "We are seeing our repeat clients slow down decision making, and moving projects forward, requiring us to go find new clients.”

The AIA has about 19,290 architecture firms as members. Those firms generated about $55.5 billion in revenue in 2021.

Deltek, based in Herndon, Virginia, makes software for architects and general contractors that analyzes building products.