M&A Update | Engineering & Construction H2-2017

Engineering and construction industry overview and indicators Baker Tilly Capital, LLC’s engineering and construction M&A update provides an overview of the U.S. engineering and construction sector, including recent performance and M&A trends. In the second half of 2017 (H2-2017), construction spending totaled $648.8 billion, which represented a 12 percent increase from the first half of 2017 (H1-2017) and a 2 percent increase from the same period in 2016. Growth in total construction spending has decelerated since 2015, but remains positive. With the passage of the Tax Cuts and Jobs Act, private capital expenditures could continue to accelerate.

Total construction spending in the U.S. (in millions)

$400,000

$350,000

$337,947

$310,886

$300,000

$250,000

$200,000

$150,000

$100,000

$50,000

$0

Q1-2012

Q2-2012

Q3-2012

Q4-2012

Q1-2013

Q2-2013

Q3-2013

Q4-2013

Q1-2014

Q2-2014

Q3-2014

Q4-2014

Q1-2015

Q2-2015

Q3-2015

Q4-2015

Q1-2016

Q2-2016

Q3-2016

Q4-2016

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Source: U.S. Census Bureau

Growth in public spending remains muted and though current administration plans are conservative they do include increases to infrastructure and defense spending. Since the Great Recession (2007-2009), public spending has declined towards a long run average and private spending has increased substantially. In December of 2017, private construction spending surpassed the 15-year high established pre-recession in February 2006.

Public versus private construction spending in the U.S.

$1,200,000

Private Public

$963,247

$1,000,000

$800,000

$600,000

$400,000

$290,047

$200,000

$0

Jan-2003

Jan-2004

Jan-2005

Jan-2006

Jan-2007

Jan-2008

Jan-2009

Jan-2010

Jan-2011

Jan-2012

Jan-2013

Jan-2014

Jan-2015

Jan-2016

Jan-2017

Source: U.S. Census Bureau

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