AMERICAN COUNCIL OF ENGINEERING COMPANIES (ACEC)
Firm Leader Optimism Rises Across the Board on Market Prospects
The 3rd Quarter 2016 (Q3/2016) EBicame in at 61.4, up 1.2 points from the Q2/2016 score of 60.2, which was the lowest score since ACEC began the Index at the start of 2014. Any score above 50 signifies that the market is growing (See box below to learn more about the EBimethodology.) The Q3/2016 survey of 326 engineering firm leaders was conducted September 15 to October 5.
Some respondents were almost euphoric about the market: “Things are going very well right now. Revenue, backlog, profitability are at all-time highs.”
However, many pointed to the nation’s political situation as a drag on the market. Said one respondent, “The protracted election cycle and less than promising candidates” have depressed the service industry sectors.
Market Climate Expectations Make Big Jump
Firm leaders are optimistic that the engineering market will improve over the coming year.
Market expectations for one year from today rose a hefty 6.2 points to 63.3, the largest quarter-over-quarter increase since the EBI’s inception.
“Things are very good for our transportation infrastructure firm and we expect it to continue as awareness increases that we need to address it,” said one respondent.
A member in Colorado said, “Market conditions improved in our area in the last three years and remain very strong.”
One area of concern continues to be softness in the energy-producing states.
“Wyoming’s economy is significantly down due to coal, oil, and natural gas sales declines,” said a respondent. “Nearly all infrastructure funding derives from state taxes on those industries, thus our outlook is less optimistic.”
Confidence High on Profitability, Backlog
Firm leaders are also bullish on profitability prospects. The score for their expectations for profitability one year from now rose 3.2 points to 67.2. Looking longer term, expectations for improved profitability three years from now climbed 1.3 points to 67.6.
Backlog expectations for one year from now also rose substantially, climbing 2.5 points to 66.1.
One respondent said the biggest challenge to meeting these rosy expectations is “finding good talent. We have added 27 staff now to bring us to a total of 95, but we still have a dozen openings to fill to meet our clients’ goals.”
About the American Council of Engineering Companies
The American Council of Engineering Companies (ACEC) is the voice of America’s engineering industry. Council members – numbering more than 5,000 firms representing more than 500,000 employees throughout the country – are engaged in a wide range of engineering works that propel the nation’s economy, and enhance and safeguard America’s quality of life. These works allow Americans to drink clean water, enjoy a healthy life, take advantage of new technologies, and travel safely and efficiently. The Council’s mission is to contribute to America’s prosperity and welfare by advancing the business interests of member firms.