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The ACEC Research Institute released this week the results of its Q3 2023 Engineering Business Sentiment Study. The Report showed continued high optimism for the industry across most market sectors, namely Roads and Bridges and Water/Wastewater. It also showed much-improved optimism for the U.S. economy as a whole.

The results were unveiled in a Future of Engineering Roundtable hosted by Institute Executive Director Daphne Bryant, ACEC Director of Private Markets and Economics Thomas Grogan, and Senior Research Consultant Joe Bates, who conducted the Study. Bates pointed to the overall robust health of the A/E industry, showing a graph charting almost universal YOY increases in revenue. “We’re seeing really, really healthy growth. Ever since we took a little dip during the pandemic, it’s been all roses since then. We continue to hit new highs in terms of overall A/E revenue,” he said.

With those metrics, Bates continued, the overall bullish sentiment throughout our industry is not surprising. He noted that net ratings for both the state of the industry as well as those of respondents’ individual firms have consistently hovered between the high +70s and high +80s, on a scale of +100. “You can’t get much better than that,” Bates concluded.

Of note in the Study is the greatly improved optimism about the overall economy, which was addressed by Grogan, who pointed to historically low unemployment rates and lessened fears of inflation as drivers behind that improved outlook. “We’ve added more than 3 million jobs over the past 12 months. Folks are going to work, earning paychecks, and coming home and saving or spending that money,” he said.

That said, while the total number of workers has grown (which has driven the lower unemployment stats), the percentage of the available workforce is still below where it needs to be. “This is still a challenge we’ve been seeing for quite some time,” said Bates. According to the Study, 87 percent of respondents currently indicate that their firm has at least one opening, down slightly from more than 90 percent last quarter. The median number of open positions decreased from five to four. More than half of firms report turning down work due to workforce shortages.

Still, seventy percent of respondents predict an increase in hiring over the next 12 months, even amid persistent (albeit lessened) fears of recession. Bates addresses those persistent fears. “Last quarter, we said that this has been longest anticipated recession in U.S. history, and here we are still anticipating it,” he said. Concerns also persist about inflation, although firms are not quite as anxious about its impact as in recent quarters. “Even stripping away the volatility of the energy market, which places upward pressure on all items, inflation does remain persistently high,” Bates said. “But I have been surprised how quickly it has come down. Last June, when we were talking about this, we said inflation can go up very quickly, and take a very, very long time to come down. It’s actually come down very quickly. That may be a piece of why we haven’t had a recession yet.”

Date

August 24, 2023

Category

ACEC NEWS, INDUSTRY STATISTICS

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