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
BIM and Information Technology | May 26, 2015
Lego-like model building kit was created by an architect for architects
Arckit, as the system is called, was designed to a 1:48 scale, making it easy to create models accurate to the real-life, physical building projected.
BIM and Information Technology | May 26, 2015
Moore's Law and the future of urban design
SmithGroupJJR's Stephen Conschafter, urban designer and planner, discusses his thoughts on the 50th anniversary of Moore's Law and how technology is transforming urban design.
Architects | May 26, 2015
AIA design competition creates portable, temporary housing for the homeless
The winning design from the AIA's "A Safe Place" competition was built at the AIA convention in Atlanta and later donated to a local non-profit partner.
BIM and Information Technology | May 21, 2015
How AEC firms should approach BIM training
CASE Founding Partner Steve Sanderson talks about the current state of software training in the AEC industry and common pitfalls in AEC training.
Architects | May 20, 2015
Architecture billings remain stuck in winter slowdown
Regional business conditions continue to thrive in the South and West
University Buildings | May 19, 2015
Special Report: How your firm can help struggling colleges and universities meet their building project goals
Building Teams that want to succeed in the higher education market have to help their clients find new funding sources, control costs, and provide the maximum value for every dollar.
University Buildings | May 19, 2015
Renovate or build new: How to resolve the eternal question
With capital budgets strained, renovation may be an increasingly attractive money-saving option for many college and universities.
University Buildings | May 19, 2015
KU Jayhawks take a gander at a P3 development
The P3 concept is getting a tryout at the University of Kansas, where state funding for construction has fallen from 20% of project costs to about 11% over the last 10 years.
Multifamily Housing | May 19, 2015
Zaha Hadid unveils 'interlocking lattice' design for luxury apartments in Monterrey, Mexico
Hadid's scheme was inspired by the Mexican tradition of interlocking lattice geometries.
Retail Centers | May 18, 2015
ULI forecast sees clear skies for real estate over next three years
With asset availability declining in several sectors, rents and transactions should rise.
