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
| Jun 8, 2012
Allsteel names Kris Yates to head architectural products group
Yates is responsible for the start up, launch and ongoing sales and marketing of Allsteel’s new Beyond movable walls.
| Jun 8, 2012
Chestnut Hill College dedicates Jack and Rosemary Murphy Gulati complex
Casaccio Yu Architects designed the 11,300-sf fitness and social complex.
| Jun 7, 2012
Waterline exhibition displays visions for re-thinking the Chicago River
The designs of Waterline showcase why the Chicago River should once again be considered the city’s most important asset and sets the stage for increased awareness, education and reinvention of the River.
| Jun 7, 2012
WDMA and FMA to affiliate and integrate operations
Over the coming months both organizations will begin the process of formalizing the details of the agreement for final approval by both organizations, with the formal change expected to take effect in January 2015.
| Jun 7, 2012
Craig joins Cannon Design as associate principal
Craig will work closely with the firm's Corporate/Commercial Interiors leadership to help facilitate initiatives that strengthen awareness around workplace innovation and offer counsel on strategic workplace decisions.
| Jun 7, 2012
Stantec publishes 2011 corporate Sustainability Report
Stantec's fifth annual Sustainability Report was prepared in accordance with the internationally recognized G3.1 Sustainability Reporting Guidelines, developed by the Global Reporting Initiative.
| Jun 6, 2012
KPF designs tower for Yongsan IBD
The master plan, created by Studio Daniel Libeskind, is a dynamic urban environment containing contributions from 19 different architects practicing in diverse locations around the globe.
| Jun 6, 2012
SOM urges Chicago tenants to partner with landlords to cut energy use
Tenants can exceed building energy challenge targets recently announced by Mayor Emanuel.
| Jun 6, 2012
KLMK Group awarded contract with Parkland Health & Hospital System in Texas
KLMK will also provide planning guidance in all aspects of the project related to facility activation.
| Jun 5, 2012
Cannon Design joins forces with Peter Ellis New Cities
Peter Ellis will now lead Cannon Design's urban planning and city design practice in collaboration with the firm's executive leadership.
