ACEC Research Institute Releases Highlights of New Five-Year Industry Forecast

ACEC News / Market Forecast

October 29, 2021

ACEC Research Institute Releases Highlights of New Five-Year Industry Forecast

Engineering industry revenues will grow by 8.1 percent for 2021, a big snapback from the 7.2 percent drop in 2020, according to a new five-year engineering industry forecast from the ACEC Research Institute.

Joe Bates of the Research Institute and Erin McLaughlin, ACEC Vice President for Private Market Resources, presented the highlights of the forecast. The Institute will publish the full forecast in the coming weeks.

In the baseline forecast for 2022 through 2026, the engineering industry will average 2.5 percent annual growth. And if the Infrastructure Investment and Jobs Act passes, it would increase A/E output by $132 billion over the next five years, which represents an average 5.6 percent annual increase in A/E economic activity over the forecast period.

McLaughlin reported that the primary driver behind the growth in 2021 and a continued strong performer in the coming years is the residential market, specifically the single-family. The market drives a lot of activity for engineering firms, including new transportation infrastructure, water systems, and commercial and retail construction.

The Research Institute will also release in the coming weeks its inaugural sentiment survey for the design services industry, and Bates reported that firm leaders’ optimism about their firms’ current performance is “off the charts.” Large firm leaders were the most optimistic, as were those in the South and Midwest.

Looking ahead 12 months, firm leaders remained very optimistic about their firms and the industry but had concerns about the overall U.S. economy.

The labor shortage is the biggest downside risk to firms’ continued strong performance, with nine out of ten firms reporting that they had at least one open position and firms with more than 500 employees reporting a median level of 60 job openings.

Another risk is inflation, and Bates said that he doesn’t believe it’s going to moderate anytime soon, especially in this A/E/C industry.

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