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
Healthcare Facilities | Jul 6, 2015
The main noisemakers in healthcare facilities: behavior and technology
Over the past few decades, numerous research studies have concluded that noise in hospitals can have a deleterious effect on patient care and recovery.
BIM and Information Technology | Jul 6, 2015
New documentary shows Legos as touchstones of creativity
The film's narrator, actor Jason Bateman, says it’s a story “about a simple toy and how its unique properties ushered in a new era of creativity for a whole generation.”
Contractors | Jul 1, 2015
ABC: Nonresidential construction spending continues growth with stellar May
Through the first five months of 2015, nonresidential construction spending is having its second best year since the Census Bureau began tracking the metric in 2002, according to ABC.
Architects | Jun 29, 2015
Getty Foundation announces second series of ‘Keeping It Modern’ grants to conserve 20th century architecture
Frank Lloyd Wright’s Unity Temple and Erich Mendelsohn’s Einstein Tower are among the 14 projects added to the Keeping It Modern grant program.
Architects | Jun 29, 2015
9 top picks for continuing education from BD+C University
A roundup of top AIA/CES Discovery courses from BD+C University.
Industrial Facilities | Jun 24, 2015
5 trends that will shape the future of scientific labs
Scientific research is increasingly focusing on data collection and analytical analysis of that data, meaning the "lab of the future" will more closely resemble contemporary tech spaces, writes Gensler’s Erik Lustgarten.
Architects | Jun 23, 2015
Architecture Billings Index back to positive territory for May 2015
The American Institute of Architects reported the May ABI score was 51.9, up from a mark of 48.8 in April.
Architects | Jun 23, 2015
If film directors designed homes, what would they look like?
From Burton to Bergman, Gondry to Greenway, artist Federico Babina illustrates what buildings would look like if designed by the world’s greatest directors.
High-rise Construction | Jun 23, 2015
The world's best new skyscrapers for 2015
One World Trade Center and Abu Dhabi's Burj Mohammed Bin Rashid Tower are among the four towers named Best Tall Buildings by the Council on Tall Buildings and Urban Habitat.
Museums | Jun 23, 2015
Moreau Kusunoki's 'art in the city' scheme wins Guggenheim Helsinki design competition
The firm’s design concept makes use of the museum’s site, turning it into a bustling, well-connected waterfront hub.
