Industry Outlook

Engineering Business Sentiment - the Current and Future State of our Industry

ACEC now conducts a bi-annual Engineering Business Sentiment Survey that captures the outlook of firm executives and industry leaders. This survey explores their perspectives on their firm’s financial health, optimism for the engineering and design services industry, and their views on the overall condition of the Canadian economy.

The survey, conducted in partnership with the ACEC Research Institute - the research division of the American Council of Engineering Companies - provides valuable context to the economic data published annually by ACEC, offering a clearer picture of our industry's current state and future direction. By analyzing these findings, ACEC produces reports that deliver actionable insights into current and emerging business conditions and key trends shaping consulting engineering firms across Canada.

The Engineering Business Sentiment report is a critical tool for understanding the industry's opportunities and challenges, helping firms navigate a rapidly evolving landscape.

Key findings from the latest survey:

Current Business Conditions

• Current sentiment is positive. The Net Ratings for firms’ finances (+90) and for the industry (+71) are very high. The Net Rating for the Canadian economy is +14.
• Optimism about the Canadian economy fell by 17 points compared to 2024 H2.
• Current sentiment remains very optimistic within all market sectors. Sentiment is strongest in Energy and Utilities (+70) and Roads & Bridges (+70).
• Sixty percent indicate their firm has a current backlog of less than one year. The median remained steady at eight months.
• Since last year, the overall backlog has remained steady.
• Ninety-two percent of firms have at least one opening, up five percentage points from 2024 H2. The median number of open positions remains consistent at six.
• Many segments saw declines in the number of open positions at firms compared to 2024 H2.
• On average, five percent of positions remain unfilled, consistent with 2024 H2.
• Most segments saw declines in open positions as a percentage of all FTEs relative to this time last year.

Future Business Conditions

• Future sentiment is positive for the firm’s finances (+21), but respondents are less enthusiastic about the future of the industry (-8) and very pessimistic about the Canadian economy (-46).
• Future sentiment fell by nine points for the firm’s finances, 16 points for the industry, and 44 points for the Canadian economy.
• While most segments saw a decline, all segments remain positive about the future of the firm’s finances.
• Political Environment/Uncertainty (90%) and General Economic Uncertainty (76%) are fueling negative future sentiment.
• Most industry sectors saw declines in future sentiment compared to the second half of 2024.
• Roughly one-third of firm executives (35%) believe their firms will see a higher backlog of projects 12 months from now, a decrease of 15 points from 2024 H2.
• While backlog sentiment for one year from now remains positive across all segments, the Net Rating has decreased dramatically since 2024 H2.
• Sixty-three percent predict there will be an increase in hiring over the next 12 months, down from 69 percent in 2024 H2. The resulting Net Rating declined 11 points to +55.
• Although future hiring sentiment remains high across all segments, nearly all segments saw declines relative to 2024 H2.
• Forty-four percent of firm executives agree they are extremely concerned about the impact of inflation on their firm; the Net Rating increased from +4 to +18.
• The likelihood of recession in the next six months is 58 percent according to the average estimate among firm leaders, a significant increase from 2024 H2 (43%).

Hot Topics

• Political disruption due to the new U.S. administration is the biggest concern among firm executives as they head into 2025.
• The average firm derives 40 percent of its revenue from private clients.
• The average firm derives 11 percent of its revenue from federal public clients.
• The average firm derives 27 percent of its revenue from provincial/territorial clients.
• The average firm derives 23 percent of its revenue from municipal clients
• Most firms (90%) say that the average salary for new hires at their firm has increased in the past year.
• The average annual salary increase for new hires was seven percent.
• Most firms (90%) report that the average salary for existing employees has increased in the past year.
• The average salary increase for existing staff was six percent over the past year.