For the past 20 years, PSMJ Resources has conducted a quarterly survey of its members and other architecture, engineering, and construction (A/E/C) industry professionals to measure proposal activity across 12 major markets and 58 submarkets. For the 3rd Quarter of 2023, respondents to the Quarterly Market Forecast (QMF) reported a substantial slowdown in Single-Family Housing and ongoing struggles for Commercial markets, but continued strength for publicly funded markets such as Water/Wastewater and Transportation. Among the 58 submarkets assessed, Renewable Energy has been a gold mine for architects, engineers, and contractors for nearly three years.
Here are 10 brief takeaways from the most recent survey, which uses PSMJ's proprietary net plus/minus index (NPMI) as a measuring stick.
- Housing Slumps Again. The Single-Family Development submarket was particularly disappointing. After rebounding from an NPMI of -1.5 to plus 9.5 in the 2nd Quarter, its index number plummeted nearly 30 points.
- Overall Activity Stagnates. Since rebounding in the 1st Quarter of 2023 to an NPMI of 32.8 from 8.0 in the prior quarter, overall proposal activity across all markets and submarkets has been an uninspiring 24.9 and 25.5 for the last two quarters.
- Transportation Roars. Transportation proposal activity remains high; this major market has been among the top five in six of the last seven quarters.
- Renewables Still Unstoppable. Renewable Energy has been the leading or second-place submarket in eight straight quarters.
- Warehouse & Distribution Falls to Earth. Proposal opportunities for Warehouse and Distribution Facilities moderated in the 3rd Quarter after a long stretch of high activity, dropping across three separate markets, quarter-over-quarter and year-over-year.
- Mining/Extraction Shows Surprising Strength. Since the 4th Quarter of 2022, when Mining/Extraction hit a 10-year record-high NPMI of 50.0, the Heavy Industry submarket has been above 20.0 throughout 2023. Demand is driven by the growing need for materials that are "the foundational technologies of tomorrow," according to the National Mining Association.
- Petroleum Sinks. In the 4th Quarter of 2022, Petroleum Facility proposal opportunities spiked with an NPMI of 62.5. After a flat 2nd Quarter, the market dropped into negative territory at -11.8 in the most recent quarter. The 1st Quarter may have been an anomaly.
- Commercial Troubles Linger. The Commercial Developers and Commercial Users markets were again the only major sectors in negative territory. Among submarkets, half of the 10 lowest NPMIs came from these two markets.
- Environmental Permitting Surges. The third-best submarket of the 3rd Quarter, Environmental Permitting has been on a record-setting run, with NPMIs over 60.0 all three quarters of 2023. Likely reasons include the high level of government-funded construction, a renewed focus on environmental regulations and the need for environmental permitting in strong markets such as renewables and water/wastewater projects.
- Education Stays Solid. Education scored the fifth-best major market NPMI in the 3rd Quarter and all four education submarkets showed an NPMI above 20.0.