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US environmental C&E sector could peak in 2018, says EBJ

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The US environmental consulting and engineering (C&E) sector grew by 4.0% to reach $31.3bn in 2017, according to the latest market research published by Environmental Business Journal (EBJ). It represents a more than doubling of the 1.4% growth rate reported in 2016 and, according to EBJ, consultants can expect 2018 to deliver much of the same.

The environmental C&E industry’s strong 2017 performance was driven by robust performances across its three largest private client sector areas, notably oil & gas (+8.3%), chemical/pharmaceutical (+7.3%) and power utilities (+5.9%). Meanwhile, government spending - amounting to c$15bn and representing approximately 48% of total industry revenue - was up a modest 2.2% but nonetheless an improvement on the 0.1% decline in the previous year. The findings also revealed a continued upward trend in international work, with 5.8% of the 2017 revenue total derived from outside the US.

In terms of market share, the US top five C&E firms – AECOM, Jacobs, Tetra Tech, Stantec and Arcadis – dominate the market with a combined 28% share, up from 23% a year earlier.

Although the market as a whole experienced growth, the number of firms reporting rising revenues year-on-year was down slightly at 67% compared to 69% in 2016 and 73% in 2015. Furthermore, once again the largest players failed to keep pace, with growth amongst the >$1bn revenue players of 2.8% in 2017 (albeit a welcome reversal of the -0.4% in 2016). That said, moving down a tier, the >$100m banding of firms enjoyed an above market average growth rate of 5.4%.

EBJ’s projection for 2018 suggests an equally solid, perhaps even stronger, performance with predicted market growth of 4.0-4.5%, which if realised would be its best since 2012. However, EBJ cautions 2019 may be less bountiful "as more concerns cloud the horizon than the promise of new drivers," with predicted growth slowing to 3.0-3.5%, dragged down by expectations of a sharp drop in oil prices and the possibility of a correction in financial markets potentially leading to a recession in the US. The government shutdown that dragged from late 2018 into the start of 2019 could also "hobble growth" for a year or two, it is suggested.

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