The Trump Administration’s plans for infrastructure investment, regulatory reform and tax relief have ignited a burst of enthusiasm among U.S. engineering firm leaders, according to the American Council of Engineering Companies’ Engineering Business Index (EBI). The organization recently announced the index's largest ever quarterly increase.
The 4th Quarter 2016 (Q4/2016) EBI surged 5.1 points to 66.5, up from the 61.4 score of Q3/2016. The previous largest increase was 1.5 points between the Q1/2014 and Q2/2014 surveys. Any score above 50 signifies that the market is growing The EBI is a leading indicator of America’s economic health based on the business performance and projections of engineering firms responsible for developing the nation’s transportation, water, energy and industrial infrastructure. The Q4/2016 survey of 317 engineering firm leaders was conducted November 31 to December 20.
Survey results show firm leader market expectations for one year from today rose a hefty 8.8 points to 72.1, the largest quarter-over-quarter increase since the EBI’s inception in January 2014. Expectations for both short- and long-term profitability also climbed. Firm leader optimism for improved profitability over the next six months rose 3.6 points to 69.0; increased to 72.9 for one year from now; and climbed 2.9 points to 70.5 for three years from now.
“We finally have a president who understands business!” said one respondent. “We’re looking forward to some significant tax relief with the new Administration,” said another.
Still another added: “I think they will address those issues that negatively impact small business. Also, it looks like they will address infrastructure needs across the country.” Some respondents, however, expressed reservations: “I’m concerned about the extreme uncertainty introduced into the market by the new Administration,” said one.
The boost in firm leader optimism extends across almost the entire engineering marketplace. In public markets, transportation showed the strongest increase, up an eye-catching 9.5 points to 73.7. “Infrastructure investment is expected to increase by end of the year, and fewer regulations will spur additional investments on most every front,” said a respondent. “We expect that to continue for 2017 and beyond.”