Insight

Engineering & Construction Market Update: Q2 - 2019

Upgrading America’s infrastructure to adequately meet anticipated future demands.

Stephen Guy

Stephen Guy

Managing Director, KPMG Corporate Finance LLC

+1 410-949-8909


U.S Engineering & Construction Highlights

  • Upgrading America’s infrastructure to adequately meet anticipated future demands, due to population growth and increased urbanization, will continue to serve as an industry tailwind over the long-term.
  • Key forward looking E&C sector indicators continue to remain positive, supporting the notion the current multi-year public spending cycle is anticipated to continue into the foreseeable future.
    • YTD Non-residential construction spending has increased 5.8% through May.
    • Construction backlog increased 13.8% on a YoY basis in Q1’19.
    • YTD through May, construction spending in the power and water supply sectors are up 1.1% and 19.2% respectively.

Insight

  • Growth in non-residential spending has continued to increase in 2019, supporting the notion the temporary government shutdown delayed spending during the second half of 2018.
  • While spending in the power sector has increased modestly in 2019, positive spending growth over the long-term is expected due to the ongoing need for utilities to improve reliability, reduce congestion, and connect to new sources of renewable energy generation.
  • Construction backlog grew 13.8% on a YoY basis in Q1’19 as government spending for large public infrastructure projects is anticipated to continue.
 

Construction Backlog(1)

 

Non-residential Construction Spending

 

Construction Spending by Sector

(1) Construction backlog includes publicly disclosed backlog detail for AECOM, Aegion Corporation, Dycom Industries, Fluor Corporation, Granite Construction, Great Lakes Dredge & Dock, Jacobs Engineering Group, KBR, MasTec, MYR Group, Primoris Services, Quanta Services, Tetra Tech, and Tutor Perini
* Denotes  % change in aggregate construction spending for January to May, on year-on-year basis.
Source: S&P Capital IQ, Associated Builders and Contractors, and wall street research

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