Latest ACEC Research Institute Engineering Business Sentiment Survey Results
To the ACEC Community:
The second quarterly ACEC Research Institute Engineering Business Sentiment survey, which we released today, paints a starkly two-tone picture. The 600-plus member firm respondents are “extremely optimistic” about the current state of their firms and our industry, but at the same time their “faith in the future of the U.S. economy dropped.”
Before we get into the numbers, the survey uses a “Net Ratings” system, in which the negative responses are subtracted from positive responses. A positive Net Rating indicates optimism and a negative one indicates pessimism, and the higher the number, the stronger the sentiment.
The Net Rating for the current state of firms’ overall finances is a staggering +88 and +82 for the engineering and design services industry today. In the first sentiment survey in October, those numbers were +83 for firm finances and +74 for the industry.
Large firms (more than 500 employees) are the most positive about their firm’s finances with an almost unbelievable +98 Net Rating, and small firms (fewer than 25 employees) showed the biggest improvement, climbing 17 points to a +76 Net Rating.
Sentiment about the current state of the U.S. economy dropped 11 points to a +29 rating, but looking ahead 12 months from now, more respondents expect the economy to worsen, pushing the Net Rating into negative territory (-3).
A primary driver in that pessimism is inflation, with 73 percent of respondents saying they are “extremely concerned.”
Nevertheless, respondents remain “very optimistic” over the coming 12 months about their firm’s finances (+51) and the overall performance of the design services industry (+42).
Given the market optimism, it’s not surprising that two-thirds of firms expect to increase their backlog of projects over the next year. The median backlog stands at 10 months right now and 45 percent of respondents have a backlog of one year or more.
Looking at specific market sectors, respondents are most optimistic about Roads and Bridges (+67), Water/Wastewater (+59), Transit (+55) and Airports (+53).
These sectors’ high ratings are likely a direct reflection of the passage of the Infrastructure Investment and Jobs Act (IIJA) at the end of last year. Respondents are optimistic (+42) that the IIJA will “greatly increase their project opportunities;” but given market pressures, they are less certain (+7) that those projects will “greatly increase the profitability” of their firm.
There is a lot more to the study, such as regional and firm-size breakdowns as well as “hot button” questions. I encourage you to download it here. You’ll get a really good picture of the prevailing mood of our industry.
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