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
| Oct 19, 2011
THOUGHT LEADER: Samuel S. Unger, RA, MCR, SLCR, MBA, is the Americas Real Estate Leader for Ernst & Young, LLP
Samuel S. Unger, RA, MCR, SLCR, MBA, is the Americas Real Estate Leader for Ernst & Young, LLP, Atlanta. He also serves as president of the CoreNet Global Atlanta chapter. In addition to managing 6.8 million square feet of real estate in North and South America, his responsibilities include real estate strategy for area practices, management of external professional alliances, requirements definition, business case development and approval, real estate negotiation and lease development, and oversight of construction projects for the portfolio. He holds a bachelor’s degree from Harvard College, an MLA and MArch from the University of Pennsylvania, and an MBA from Temple University.
| Oct 19, 2011
Another drop for Architecture Billings Index
Positive conditions seen last month were more of an aberration.
| Oct 19, 2011
System for installing grease duct enclosures achieves UL listing
Updated installation results in 33% space savings.
| Oct 18, 2011
Michel Bruneau wins 2012 AISC T.R. Higgins Award
The AISC T.R. Higgins Lectureship Award is presented annually by the American Institute of Steel Construction (AISC) and recognizes an outstanding lecturer and author whose technical paper(s) are considered an outstanding contribution to the engineering literature on fabricated structural steel.
| Oct 18, 2011
Dow Building Solutions invests in two research facilities to deliver data to building and construction industry
State-of-the-art monitoring system allows researchers to collect, analyze and process the performance of wall systems.
| Oct 18, 2011
Architectural leaders join Gehry to form strategic alliance
Alliance dedicated to transforming the building industry through technology.
| Oct 18, 2011
St. Martin’s Episcopal School expands facilities
Evergreen commences construction on environmentally sustainable campus expansion.
| Oct 17, 2011
THOUGHT LEADER: Allan Bilka, Senior Staff Architect and Secretariat to the IGCC
Allan Bilka, RA, is a Senior Staff Architect and Secretariat to the International Green Construction Code (IgCC) with the International Code Council, based in the ICC’s Chicago district office. He also serves as staff liaison to the ICC-700 National Green Building Standard. He has written several ICC white papers on green building and numerous green-related articles for the ICC. A registered architect, Bilka has over 30 years of combined residential design/build and commercial consulting engineering experience.
| Oct 17, 2011
Austin's newest urban apartment complex under construction
Complex sits on a four-acre waterfront site along Lady Bird Lake with spectacular city and lake views, and is slated to open spring 2013.
