DIVERSIFIED INDUSTRIALS MARKET INSIGHTS
- Manufacturing activity growth driven by hard-goods consumption and fiscal stimulus
- Raw material and supply chain disruptions lead to increased costs
- Industrial Services, Industrial Technology, Distribution & Logistics, and Precision Manufacturing M&A was strong through Q1 2021
As the U.S. turns the corner on the pandemic, manufacturing activity has returned, driven by fiscal stimulus and consumers turning to hard-goods. In February 2021, the Institute for Supply Chain Management manufacturing index reached a 3yr high, tying levels reached in February 2018.
Increased manufacturing activity coupled with challenged supply chains has led to shortages and price increases among raw materials and other necessary components. Steel, lumber, semiconductors, and other necessary raw materials have seen large-scale shortages and as a result, increased prices.
M&A activity in the space has also seen a resurgence, with Q4 2020 M&A volume increasing 80% since Q2 2020 lows. With 385 deals through March 2021, the year is on track to return to pre-pandemic deal volume.