Engineering Influence from ACEC

Kevin Chamberlain, the Chair of the CASE Coalition - the Coalition of American Structural Engineers - joined the program to update us on what's happening at the group and the issues facing structural engineers.

ACEC Geopfrofessionals Coalition Chair Jeff Gebhard joined us for an update on the coalition's work at the Fall Conference.

Allison Schneider spoke with Connie Taggart, director of HR with Wright-Pierce and Anne Harney, senior vice president of HR with Collins Engineers about workforce issues. They chatted during the HR Forum ACEC recently hosted in San Antonio.

Welcome to ACEC’s September economic update. Each month, the ACEC team analyzes the latest industry data and provides insights for the engineering and design industry. 

Correction: Our original podcast noted A/E industry revenues at $140 billion.  The amount has been corrected to $110 billion (9-20-22).

Here are the top 5 things you need to know:

Number 1 – The Q2 2022 total A/E revenues are in and they are at a new all-time high clocking in at nearly $110 billion. This breaks the previous record set just last quarter and marks the 8th straight quarter of consecutive growth. Engineering services led A/E firm revenue growth with a 7.3% increase between the first and second quarters of the year. Architecture services increased by 1.3% from Q1 to Q2.

 

Number 2 – The U.S. Census Bureau reports that total design and construction spending was up 8.5% in July, compared to the same time last year. Key markets that we track showed private residential spending (+14%), private non-residential (+3.1%) and public spending (+3.3%) year-over-year.

 

Number 3 – Turning to the labor market, applications for unemployment benefits fell for a fifth straight week in mid-September to the lowest level in more than three months. That news could mean the need for workers remains healthy despite an uncertain economic outlook – a sentiment we are certainly experiencing in our industry.

 

Number 4 – Inflation isn’t going away. On Tuesday, the government said inflation ticked up 0.1% from July to August and 8.3% from a year ago. As inflation continues, the Federal Reserve is set to meet next week to discuss interest rates. Experts put a nearly 80% chance of a 75-basis-point increase and a 20% chance that the fed goes for a full 100 basis point hike. All eyes will be on that meeting Sept. 20 and 21.

 

And Number 5 – On November 15, ACEC will host a private market symposium in Houston, Texas examining the energy sector. This symposium will bring together clients, economists, a/e firms, policy makers and engineering leaders for an in-depth look at the latest in the energy market. We will also cover certain funding opportunities from the bipartisan infrastructure bill and The Inflation Reduction Act. Head to acec.org for more information to join us Nov. 15th in Houston.

 

There you have it. The economic update series is one of ACEC’s private market resources for media and members.

Allison Schneider is attending this year's ACEC Fall IT, HR, and Finance Forums in San Antonio, TX this week where she sat down with Johnathan Allen, EVP with JLL Tennant Representation Group to discuss the return to the office for the engineering industry.  

Allison and John discuss the challenges of moving back to an in-office workplace, the cultural divide between management and young professionals, and the necessary HR strategies that will assist firms with the return to normal.

Danushka Nanayakkara-Skillington, the National Association of Home Builder's Assistant Vice President for Forecasting and Analysis joined Diana Alexander to discuss the outlook for residential real estate development now and into next year.

Welcome to ACEC’s August economic update. Each month, the ACEC team analyzes the latest industry data and provides insights for the engineering and design industry. 

Here are the top 3 things you need to know:

Number 1 — Total design and construction spending was up more than 8% this June, compared to the same time last year says the U.S. Census Bureau. The category remains driven by private residential and non-residential.

Number 2 — The hottest market in the private, non-residential sector is still manufacturing, which is up nearly 23% from the previous year.

Number 3 — The U.S. economic outlook is mixed when it comes to inflation, jobs numbers, and GDP. With two consecutive quarters of negative GDP growth we have, by definition a recession.

However, record job growth paints a brighter picture. The most recent jobs report from the Bureau of Labor Statistics surprised many adding more than half a million jobs in July.

When it comes to inflation, the consumer price index also shows positive movement. The consumer price index or CPI from the Bureau of Labor Statistics  measures the price of everyday goods including gasoline and groceries. The CPI rose 8.5% in July from a year ago. While still high, that’s below the more than 9% year-over-year increase from June.

There you have it. The economic update series is one of ACEC’s resources for media and members.

For a deeper dive, check out all of ACEC’s popular Private Industry Briefs and ACEC’s full slate of private market offerings at ACEC.org.

Thanks, and we’ll see you again next month.

We were joined again by Matt Reiffer, VP of Transportation Programs  and Katharine Mottley, VP of Tax and Workforce Policy with the ACEC Advocacy team to provide an update on the progress of the Senate budget deal.

We were joined by Matt Reiffer, VP of Transportation Programs and Katharine Mottley, VP of Tax and Workforce Policy at ACEC to take a closer look inside the moving parts of the Senate budget deal that is expected to reach the floor later this week.

Ken McGill with Rockport Analytics and chief economist for the ACEC Research Institute joined the podcast to discuss the Fed's 75 basis-point interest rate hike and what it means for the economy and the engineering sector. 

 

Host:

Hi there, and welcome to the engineering influence podcast from the American Council of Engineering Companies. I'm Allison Schneider, ACEC's Director of Media Relations, and I'm joined today by Ken McGill of Rockport Analytics to discuss today's announcement that the Fed will once again raise interest rates. Ken also serves as chief economist for the ACEC Research Institute, which provides original research and analysis on topics vital to the business of engineering. Ken, thanks for being here.

Ken McGill:

Thank you, Allison.

Host:

Now let's jump right into it. Today, The Fed announced an interest rate hike of three-quarters of a percentage point. That's the same as they did in June. Now, this is the fourth rate increase in five months. Talk to us about what the Fed is seeing in the economy to take this action.

Ken McGill:

Well, clearly they're focusing on fighting inflation and, I think the CPI reading of 9.1% last month certainly was worrisome for all of us, but the Fed paid very close attention to that. And, that was at least part of the reason for a 75 basis point increase in the fed funds rate. Having said that, they're also aware that the economy — some of the real measures of the economy — are beginning to slow spending and even employment to some extent and some of the high-frequency measures of inflation are actually beginning to fall off of their peaks. So I think that was the reason that many of the analysts that thought we were going to a 100 basis point increase turned out to be incorrect.

Host:

This is of course going to make borrowing money more expensive. How do you see this announcement affecting our members?

Ken McGill:

Yes, absolutely. The increase in borrowing costs is going to hurt many sectors of the economy, construction and housing being one of the more dominant ones and one of the ones that get hit very quickly of course. When we talk about rising borrowing costs, you can think about the housing side that that's certainly going to cut into demand because affordability for mortgage rates alone becomes lower. First-time buyers certainly have more trouble coming into the market.

Ken McGill:

Particularly in the face of the increases in home prices that we've seen. On the other hand, when you think about non-res construction borrowing costs, there are also significant and there are knock-on effects that affect the pricing of materials and labor, as well as, you know, elevated in interest rates begin to permeate through the economy.

Ken McGill:

So, yeah, it's, it's not a good thing for construction. The question really is, um, things will begin to turn negative. Some of the indicators already have, as we all know, it's a question of just really how fast and how far things will fall off. Now for our members, as many of them know, A/E services tends to lead construction activity, and my guess would be that some of the construction indicators that are already beginning to weaken which suggest that they're already seeing in some of their bookings some weakness as well. They'll also lead us into the recovery that we will see as soon as inflation begins to fall off into and get closer to the Fed's target range of 2%.

Host:

You mentioned that target range. The fed has the dual mandate of maximum employment and stable prices. We know the labor market is going strong, but inflation data showed prices soared to 9.1% in June. It seems like with this action, the Fed's trying to walk a tight rope to slow inflation without increasing unemployment. Can you talk about that a little bit?

Ken McGill:

Absolutely. Their dual mandate — and it is a tight rope. When you think about the fact that those two things can actually be inversely related. Said differently, you know, fighting inflatio