Washington, D.C. — The American Council of Engineering Companies' Engineering Business Index (EBI) has fallen for five consecutive quarters, reflecting a decline in long-term expectations among engineering firm leaders for the U.S. economy as a whole and the engineering industry in particular.

The latest EBI survey, conducted September 8-30, 2015 of 309 engineering firm leaders throughout the nation, produced a composite score of 62.4. Although that number is solidly positive — any score over 50 indicates growth — it is 1.2 points lower than the second quarter score and 6.4 points lower than the third quarter of 2014, which was a recent high point.

EBI is a diffusion index that charts the health of the engineering industry by consolidating senior leadership responses on market and firm performance into a single composite score.

Engineer CEO confidence in today’s market, compared to 12 months ago, dropped 2.2 points from the previous quarter. Their confidence in market conditions ahead (one year from now) fell 3.5 points from the second quarter — to 62.8 — and is down 9.6 points from the first quarter of 2015.

Driving that decline are CEO worries about firm profitability, with expectations for profits for the short term (six months) dropping 2.9 points from the previous survey and 5.0 for the long term (three years).

Backlogs are also a concern, with the score comparing current backlogs to six months ago dropping 4.2 points to 63.0. On a positive note, backlog expectations for 12 months from now increased by 1.2 points to 62.3.

Market sector expectations mixed

Looking forward 12 months, CEO confidence climbed for only two private market sectors: Energy and Power jumped 3.2 points to 66, and Health Care Construction rose 1.9 points to 63.7. Land Development remains the strongest sector, but the score still dropped 1.5 points to 72.1.

In public market sectors, CEO expectations for Transportation rose — up 1.9 points to 58.4, possibly reflecting hope for a new highway bill or satisfaction with state initiatives — as did Water and Wastewater (up 1.6 points) and Environmental (up 4.2 points) sectors.

The Education sector is languishing, down 5.4 points to 50.0 in the private market sector and down 1.2 points to 52.6 in the public market.

Hot growth markets

Asked which emerging markets they believe show the most potential for growth in the coming years, 21 percent of respondents chose “Smart Infrastructure/Smart Cities,” in which digital technologies enhance the quality and performance of infrastructure/urban services to reduce costs, lower resource consumption, and engage more effectively with users.

Following close behind was “Renewable Energy Production, Transmission, and Storage,” at 19 percent, then Climate Change Resiliency (15 percent), Education on/Health Care Facility Renovations (14 percent), and Infrastructure Security/Vulnerability Protection (13 percent).

For a complete summary of the third quarter 2015 EBI, go to www.acec.org.

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