Source: American Council of Engineering Companies Research Institute, Washington, D.C.
ACEC Research Institute Engineering Business Sentiment report data shows engineering firms are dramatically more optimistic toward the U.S. economy than they were last year, and that wage inflation, versus the likelihood of a recession, is the biggest single concern among executives as 2024 unfolds. Among respondents to a survey underpinning the report, future industry sentiment (12 months out) is positive in Transportation, Energy and Utilities, and Water and Wastewater sectors, while current sentiment remains very optimistic in most sectors. Confidence is highest in Roads & Bridges, Airports and Wastewater. Report authors also cite a marked year-over-year increase for Science and Technology sector ratings as measured by survey responses, along with a precipitous decline for Commercial Real Estate sector ratings.
“Engineering firms are entering 2024 with strong backlogs of work and optimism,” says ACEC Research Institute Chair Mike Carragher. “This allows firm leaders to step back and think about strengthening their long-term strategies and investing in their people. They are the most important and valuable component of our businesses.”
“The Institute has now conducted the Business Sentiment Survey for 10 quarters, and we’ve found that many survey metrics are leading indicators of future economic performance,” observes Senior Research Consultant Joe Bates. An Institute analysis shows that survey data such as current and future sentiment on the U.S. economy and the engineering industry leads by one to two quarters on macro-economic trends like employment, housing starts, and inflation, he adds.
Business Sentiment Survey results highlight top respondent concerns. Wage inflation leads as engineering executives head into 2024 (74 percent for existing staff, 73 percent for new hires). Political disruption from the 2024 presidential election follows at 56 percent, and 40 percent of firms are concerned about project delivery delays or cancellations due to high interest rates. Just over half of survey participants indicated they had turned down work in the most recent quarter due to workforce shortages; among them, 88 percent are being more selective with their projects and 60 percent are taking a pass on less profitable projects. One-fourth of firms responding to the survey are turning down good, profitable projects due to workforce shortages.