Proposal activity for architecture, engineering and construction (A/E/C) firms increased significantly in the 1st Quarter of 2023, according to PSMJ’s Quarterly Market Forecast (QMF) survey. The predictive measure of the industry’s health rebounded to a net plus/minus index (NPMI) of 32.8 in the first three months of the year. This followed the 8.0 NPMI in the 4th Quarter of 2022, which marked the lowest level since the final quarter of 2020 and the second-lowest NPMI recorded in the last 10 years.
PSMJ President Greg Hart noted that the 1st quarter results are a pleasant surprise, especially since data was collected after the Silicon Valley Bank collapse and amid continuing interest rate hikes and recession predictions. “I don’t think anybody expected this kind of recovery,” he said. “But inflation is cooling and there are some positive signs in the housing market, so maybe we’ve found the bottom.”
First quarter results have historically been the strongest throughout the history of the QMF survey, which may play some part in the jump in project opportunities. In the last 10 years, the first quarter NPMI averaged 45.2, with the results weakening in subsequent quarters. The average NPMI for the 2nd quarter since 2013 is 36.5, with the third and fourth quarters averaging 29.0 and 25.7, respectively. Year-over-year, the NPMI for the first three months of 2023 was down substantially from a near-record NPMI of 60.2 reported in the first quarter of 2022.
PSMJ’s proprietary NPMI is the difference between the percentage of respondents who say that proposal opportunities are growing and those reporting a decrease. In addition to overall activity, the QMF surveys A/E/C firm leaders about their proposal activity experience in 12 major markets and 58 submarkets.
Private Sector Construction Markets Struggle, Publics Thrive
Firms working in private-sector markets continue to report historically low levels of proposal activity, while those in the public sector perform better, as the chart below indicates. Environmental topped all 12 major markets with an NPMI of 71.4, followed by Water/Wastewater at 70.8. Transportation continues to thrive, aided by the Infrastructure Investment and Jobs Act (IIJA), with an NPMI of 65.5. Energy/Utilities remains solid, repeating its fourth-place finish from the prior quarter and a near-exact NPMI of 55.1 (down from 55.2).
Since the 1st quarter of 2019, the Energy/Utilities market has been out of the top five only once (the 2nd quarter of 2021), and the Water/Wastewater market has missed the top five just twice.
The biggest surprise of the 1st Quarter may be that Education was the fifth-strongest among the major markets with an NPMI of 42.2. This is the first time that Education hit the top five since the 2nd quarter of 2018. The Higher Education (NPMI of 45.3) and K-12 (42.3) submarkets drove the resurgence.
Related Stories
Building Team | Oct 26, 2022
The U.S. hotel construction pipeline shows positive growth year-over-year at Q3 2022 close
According to the third quarter Construction Pipeline Trend Report for the United States from Lodging Econometrics (LE), the U.S. construction pipeline stands at 5,317 projects/629,489 rooms, up 10% by projects and 6% rooms Year-Over-Year (YOY).
Designers | Oct 19, 2022
Architecture Billings Index moderates but remains healthy
For the twentieth consecutive month architecture firms reported increasing demand for design services in September, according to a new report today from The American Institute of Architects (AIA).
Market Data | Oct 17, 2022
Calling all AEC professionals! BD+C editors need your expertise for our 2023 market forecast survey
The BD+C editorial team needs your help with an important research project. We are conducting research to understand the current state of the U.S. design and construction industry.
Market Data | Oct 14, 2022
ABC’s Construction Backlog Indicator Jumps in September; Contractor Confidence Remains Steady
Associated Builders and Contractors reports today that its Construction Backlog Indicator increased to 9.0 months in September, according to an ABC member survey conducted Sept. 20 to Oct. 5.
Market Data | Oct 12, 2022
ABC: Construction Input Prices Inched Down in September; Up 41% Since February 2020
Construction input prices dipped 0.1% in September compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today.
Laboratories | Oct 5, 2022
Bigger is better for a maturing life sciences sector
CRB's latest report predicts more diversification and vertical integration in research and production.
Market Data | Aug 25, 2022
‘Disruptions’ will moderate construction spending through next year
JLL’s latest outlook predicts continued pricing volatility due to shortages in materials and labor
Market Data | Aug 2, 2022
Nonresidential construction spending falls 0.5% in June, says ABC
National nonresidential construction spending was down by 0.5% in June, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Market Data | Jul 28, 2022
The latest Beck Group report sees earlier project collaboration as one way out of the inflation/supply chain malaise
In the first six months of 2022, quarter-to-quarter inflation for construction materials showed signs of easing, but only slightly.
Hotel Facilities | Jul 28, 2022
As travel returns, U.S. hotel construction pipeline growth follows
According to the recently released United States Construction Pipeline Trend Report from Lodging Econometrics (LE), the total U.S. construction pipeline stands at 5,220 projects/621,268 rooms at the close of 2022’s second quarter, up 9% Year-Over-Year (YOY) by projects and 4% YOY by rooms.
