Economic Outlook and Construction Spending Insights for June 2023
Gain insights into the economic outlook for June 2023, featuring A/E revenues, construction spending trends, and key indicators impacting the US economy. Explore valuable data on A/E services, construction project growth, and public vs. private construction expenditure. Understand the factors influencing economic activities and forecast your business strategies accordingly.
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Presentation Transcript
EXCOM WINTER MEETNG ACEC Economic Outlook Thomas Grogan, Senior Director June 2023 FEBRUARY, 2022
EXCOM WINTER MEETNG Welcome! Economic Indicators for June 2023 The Engineering Business A/E Revenues Construction Spending The US Economy at Large Inflation Activity Looking Ahead FEBRUARY, 2022
EXCOM WINTER MEETNG A/E Revenues A/E Services Revenue Seasonally Adjusted $120,000 $100,000 Total revenues up 1.8% compared to Q4 2022 $80,000 Total revenues up 10.5% YoY Millions $60,000 $40,000 $20,000 $0 Engineering Services Revenue Architecture Services Revenue Total A/E Services Revenue Source: US Census Quarterly Services Survey, June 2023 FEBRUARY, 2022
EXCOM WINTER MEETNG Construction Spending Value of Construction Put in Place Seasonally Adjusted Annual Rate $2,500,000 Total Construction up 7.2% YoY in April 2023 $2,000,000 Subsectors show different story with residential spending down -9.2% YoY Mortgage rates at highest sustained levels in 15+ years $1,500,000 millions Total Construction $1,000,000 Private Construction Non Residential Private Construction up 31.1% YoY Public Construction $500,000 $0 May-16 May-17 May-18 May-19 May-20 May-21 May-22 Jan-16 Jan-17 Jan-18 Jan-19 Jan-20 Jan-21 Jan-22 Jan-23 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 Source: US Census Value of Construction Put in Place Survey, June 2023 FEBRUARY, 2022
EXCOM WINTER MEETNG Construction Spending Value of Construction Put in Place Seasonally Adjusted Annual Rate $1,200,000 $1,000,000 $800,000 millions $600,000 Residential Non Residential - Private Non Residential - Public $400,000 $200,000 $0 Apr-17 Jul-19 Jan-16 Apr-16 Jan-17 Jan-18 Apr-18 Jan-19 Apr-19 Jan-20 Apr-20 Jan-21 Apr-21 Jan-22 Apr-22 Jan-23 Apr-23 Jul-16 Jul-17 Jul-18 Jul-20 Jul-21 Jul-22 Oct-16 Oct-17 Oct-18 Oct-19 Oct-20 Oct-21 Oct-22 Source: US Census Value of Construction Put in Place Survey, June 2023 FEBRUARY, 2022
EXCOM WINTER MEETNG Construction Spending Top Construction (Public & Private) Year to Date Project Growth by Classification YTD Spending Jan - Apr 2022 (millions) $366,389 $65,265 $77,914 YTD Spending Jan - Apr 2023 (millions) $669,850 $92,075 $99,304 Absolute Change (millions) $303,461 $26,810 $21,390 Project Classification Percent Change Total Manufacturing Total Lodging Total Water supply 82.82% 41.08% 27.45% Total Sewage and waste disposal $118,075 $149,496 26.61% $31,421 Total Commercial $415,743 $514,212 23.69% $98,469 US industrial policy is promoting the reshoring of the supply chain CHIPS and Science Act, Inflation Reduction Act, DOE Loan Program Office Increased private investment in these sectors Source: US Census Value of Construction Put in Place Survey, June 2023 FEBRUARY, 2022
EXCOM WINTER MEETNG Inflation Annual Price Change While Federal Reserve did not increase the Fed Funds rate at the last FOMC, the message is inflation is not under control 10.0% 9.0% 8.0% 7.0% Services account for ~70% of consumer spending and those prices remain elevated 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% Jul-16 Jul-17 Jul-18 Jul-19 Jul-20 Jul-21 Jul-22 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20 May-21 Nov-21 May-22 Nov-22 Jan-16 Mar-16 Jan-17 Mar-17 Jan-18 Mar-18 Jan-19 Mar-19 Jan-20 Mar-20 Jan-21 Mar-21 Jan-22 Mar-22 Jan-23 Mar-23 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 Sep-22 All items All items less food and energy Source: US Bureau of Labor Statistics, June 2023 FEBRUARY, 2022
EXCOM WINTER MEETNG Inflation This is not limited to consumers and household budgets Good news is these costs are coming down (slightly) from 2022 Q3 (most recent DOT HCCI data) Change in Cost Indices 2.5 2 1.5 1 0.5 0 2016 Q1 2016 Q2 2016 Q3 2016 Q4 2017 Q1 2017 Q2 2017 Q3 2017 Q4 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2019 Q1 2019 Q2 2019 Q3 2019 Q4 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2021 Q1 2021 Q2 2021 Q3 2021 Q4 2022 Q1 2022 Q2 2022 Q3 US DOT HCCI Core CPI ENR MPI FEBRUARY, 2022 Source: US Bureau of Labor Statistics, US Department of Transportation, Engineering-News Reports, June 2023
EXCOM WINTER MEETNG Activity People are travelling at ~90-95% of levels compared to pre-Pandemic based on different indicators Transit ridership still low (-30%) mostly due to changes in telework, commute patterns in major urban areas Change in US Vehicle Miles Traveled 12 Month Moving Average 1.05 1.00 0.95 0.90 0.85 0.80 0.75 Source: US Department of Transportation via AlphaSense FEBRUARY, 2022
EXCOM WINTER MEETNG Looking Ahead Next FOMC meeting July 25-26 Personal consumption expenditures Unemployment claims Office/Commercial Real Estate Increased vacancy rates Increased distressed loans FEBRUARY, 2022
EXCOM WINTER MEETNG Thank You Thomas Grogan Senior Director, Economics & Private Markets 202-682-4303 tgrogan@acec.org www.acec.org FEBRUARY, 2022
