Inflation may be starting to show some signs of cooling, but the Fed isn’t backing down anytime soon and the impact is becoming more noticeable in the architecture, engineering, and construction (A/E/C) space. The overall A/E/C outlook continues a downward trend and this is driven largely by the freefall happening in key private-sector markets.
PSMJ’s latest Quarterly Market Forecast survey of 115 A/E/C executives (collected between December 28, 2022 and January 10, 2023) revealed an overall proposal activity Net Plus/Minus Index (NPMI) value of just 8.0. Any NPMI value above zero indicates that more respondents are seeing an increase in proposal activity compared to the prior quarter (+100 indicates all respondents are seeing an increase in proposal activity, -100 indicates all respondents are seeing a decrease in proposal activity). Since proposal activity is a leading indicator for backlog, revenue, and — ultimately — cash flow, the latest NPMI values provide a valuable glimpse into cash flow over the next 12 to 24 months.
While still barely clinging on to positive territory, this latest index value marks a continued decline from the record-setting 2022 Q1 value of 60.2 and a significant slide from the previous quarter value of 25.0. According to PSMJ President Gregory Hart, A/E/C firms’ marketing horsepower will be tested in the months ahead. “Huge streams of funding to support infrastructure projects are keeping the public-sector markets in pretty good shape,” states Hart. “But, if you have significant exposure to the private land development markets in your revenue mix, now is the time to act to avoid significant trouble ahead.”
Any index value greater than 20 generally indicates a healthy market. Three of the 12 client markets are now below that threshold and the two commercial markets have entered negative territory.
The Top 5 Markets for the 4th Quarter of 2022 are:
- Transportation: 62.9
- Heavy Industry: 57.9
- Water/Wastewater: 57.1
- Energy/Utilities: 55.2
- Environmental: 46.2
The following chart compares the NPMI values in each client to the same period last year:
Related Stories
Sports and Recreational Facilities | Jul 29, 2015
Milwaukee Bucks arena deal approved by Wisconsin state assembly
Created by Milwaukee firm Eppstein Uhen Architects and global firm Populous, the venue will be built in downtown Milwaukee. Its design draws inspiration from both Lake Michigan, which borders Milwaukee, and from aspects of basketball, like high-arcing free throws.
Contractors | Jul 29, 2015
Consensus Construction Forecast: Double-digit growth expected for commercial sector in 2015, 2016
Despite the adverse weather conditions that curtailed design and construction activity in the first quarter of the year, the overall construction market has performed extremely well to date, according to AIA's latest Consensus Construction Forecast.
University Buildings | Jul 28, 2015
OMA designs terraced sports center for UK's Brighton College
Designs for what will be the biggest construction project in the school’s 170-year history feature a rectangular building at the edge of the school’s playing field. A running track is planned for the building’s roof, while sports facilities will be kept underneath.
High-rise Construction | Jul 28, 2015
Work begins on KPF's 'flared silhouette' tower in Manhattan
The 62-story, 157-unit luxury condo tower widens at the 40th floor, resulting in a gently flared silhouette, accented by a sculpted crown.
Museums | Jul 28, 2015
MUST SEE: Zaha Hadid's latest museum project is built into a mountain
The museum, dedicated to legendary mountaineer Reinhold Messner, is embedded within Mount Kronplatz in northern Italy.
Smart Buildings | Jul 27, 2015
Perkins+Will imagines new opportunity for Atlantic City
The architecture giant believes it has a solution that could put Atlantic City’s existing infrastructure to good use—by turning the Jersey Shore city into a research center for climate change and coastal resiliency.
Retail Centers | Jul 27, 2015
Fish-shaped shopping mall designed for odd plot of land in China
The mall, in Qinshui, a city in China’s Shanxi province, will fit within the 250x30-meter dimensions surrounded by parallel roads and two converging rivers.
Performing Arts Centers | Jul 27, 2015
Vox Populi: Netherlands municipality turns to public vote to select design for new theater
UNStudio’s Theatre on the Parade received nearly three-fifths of votes cast in contest between two finalists.
Multifamily Housing | Jul 27, 2015
Miami developers are designing luxury housing to cater to out-of-town buyers and renters
The Miami Herald reports on several new multifamily projects, including the Paramount Miami Worldcenter, whose homes include maid’s rooms, larger terraces, boutique-size closets, and guest suites.
Architects | Jul 23, 2015
CTBUH recognizes Parkroyal on Pickering as Urban Habitat Award winner
The Singapore hotel has green space galore
