In many respects, the architecture and engineering (“ AE ”) industry experienced positive business conditions during 2022. For example, construction starts, particularly in the nonresidential building segment, were on the rise; going into 2023, construction backlog was high, and some sectors that experienced major setbacks throughout 2020 and 2021 due to the COVID19 pandemic — such as hotels and retail — appeared to be recovering. Further, throughout the majority of the year, most architectural firms reported an increase in billings and inquiries into new projects. Moreover, engineering firms registered growing revenues.
At the same time, however, as the year progressed, the shortage in building materials and other supply chain related difficulties continued to challenge the AE industry. High inflation throughout 2022 caused the U.S. Federal Reserve to raise interest rates several times, impacting the construction industry as a whole but resulting in an outsized impact on the residential construction market. Overall, the economic environment led some to fear a recession in 2023.
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