In September, SIA predicated the engineering staffing segment would be one of the few staffing segments to expand in 2023. Despite economic headwinds and broader market uncertainty, engineering staffing has benefited from influxes of federal funding for a wide variety of projects. These include efforts to bolster US infrastructure and energy stability and to position the country as a leader in green energy and advanced electronics.

This forecast was supported by responses to our November Staffing Industry Pulse Survey, in which firms with engineering revenue reported strong net increases in gross margin percentages, bill rates and new orders as well as declines in the number of unfilled orders.

All year, median year-over-year growth among engineering firms has been higher than aggregate growth, suggesting that smaller and midsize firms are outperforming larger competitors in this space. This trend appears to be intensifying as November 2023 was the first time that growth trends diverged: median year-over-year growth ticked up, while aggregate growth continued to fall for the year. Companies that specialize in engineering staffing are benefiting from clients who are looking for partners that are able to help them target the right people with the right offers.

However, there have been challenges. Engineering firms cited high interest rates and rising expenses as issues they are facing, compounded by a slow economy. These factors have a huge impact on many of the large-scale projects to which engineers are staffed. For example:

• Construction of Dominion’s Charybdis — the first US wind turbine installation vessel — is running behind schedule and overbudget, largely due to higher financing costs. Though labor and supply chain issues have been sorted out, the delay contributed to Ørsted’s cancellation of two wind farm projects off the shore of New Jersey at the end of October, the latest in a succession of such setbacks in the Northeast.

• In its 2023 National Construction Survey, Marcum (one of the leading construction accounting firms in the country) found that the majority of respondents said their costs have increased over the last year, and 50% felt that increased inflation will lead to delay or cancellation of key projects.

Despite these challenges, the silver lining for engineering firms is that the work is there, even if it is harder to complete. Outside of engineering, respondents to SIA’s Pulse survey largely cited finding new business and new job orders as their major challenges.

Looking ahead to 2024, engineering staffing firms are optimistic. Respondents to November’s Pulse survey all expect the positive trends seen over the last six months to intensify going into 2024, with more than a net 40% of firms anticipating continued growth in gross margin percentage and new orders and a net 28% of firms expecting bill rates to continue to increase while the number of new orders continues to drop.

To see how engineering staffing kicks off the new year, participate in our next Industry Pulse survey, which is scheduled to take place in January. Keep an eye out for invite emails in the first half of the month or visit our surveys webpage.