Overall, proposal activity in the architecture/engineering/construction (AEC) space showed very strong gains for the first quarter of 2024, an indication that concerns around inflation, a potential recession, and election year volatility aren’t holding this industry back…sort of. 

The post-COVID story as of late for the AEC markets has largely been one of record levels of government spending bolstering public-sector markets while the private-sector markets take the blows associated with rising interest rates and other headwinds. Enter 2024 and that is still the general story but rumors that the Fed could be cutting interest rates later in 2024 seem to be breathing some small indications of life into the commercial markets, while some in the public-sector markets might be starting to see that all that government investment isn’t going to last forever. 

“An interesting quarter…the Commercial markets might be starting to show us that they may have found a bottom and Transportation, of all markets, showed the largest year-over-year decline.” states PSMJ President Gregory Hart. “Of course, one quarter does not at all mark a trend, but improving sentiment in the commercial and speculative markets could be very welcome news for the architecture firms with significant exposure in these areas. That is where we have been seeing eroding backlogs and even layoffs…a stark contrast to many firms on the infrastructure engineering side who have been turning away work. And, while we are seeing some dip in Transportation proposal activity, that market is still on very solid ground for the time being.”
 
PSMJ’s latest Quarterly Market Forecast surveyed 186 AEC executives (collected between April 5, 2024 and April 20, 2024) and revealed an overall proposal activity Net Plus/Minus Index (NPMI) value of 50.0, which marks a marks a record high since the Quarterly Market Forecast debuted in 2003. The overall proposal activity NPMI stood at 32.8 at the same period last year. 

Any NPMI value above zero indicates that more respondents are seeing an increase in proposal activity compared to the prior quarter (+100 indicates all respondents are seeing an increase in proposal activity, -100 indicates all respondents are seeing a decrease in proposal activity). Since proposal activity is a leading indicator for backlog, revenue, and—ultimately—cash flow, the latest NPMI values provide a valuable glimpse into cash flow over the next 12 to 24 months. The following table summarizes the latest NPMI values by client market in the most recent period compared to the same period from one year ago:

Based on our latest Quarterly Market Forecast data, the following summarize the five markets with the highest NPMI values:

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