ENGINEERING, CONSTRUCTION & BUILDING PRODUCTS MARKET INSIGHTS
- Biden Administration unveils $2 Trillion infrastructure spending plan, including $932 Billion allocated for transportation, water, electrical, and telecom infrastructure.
- Building materials prices continue to rise fueled by limited housing supply, and the surge in home improvement projects.
- Merger and Acquisition activity in the sector remained high, with total deal volume increasing 5% YOY in Q4 2020 and Q1 2021.
- The Biden infrastructure plan is expected to drive demand for construction services, particularly in the transportation, utilities and green energy markets. The plan calls for modernizing the nations aging transportation, water, and electrical infrastructure over the next 5-7 years. The plan outlines $111 Billion of new spending for water infrastructure including the removal and replacement of all lead drinking pipes.
- Lumber prices skyrocketed by as much as 10% per week during 2020 and 2021 and have increased over 200% YoY. Housing starts are up approximately 30% YoY and are continuing to trend in an upward direction as demand continues to outstrip supply. Supply constraints at lumber mills and high demand for finished lumber driven by home improvement and new housing starts have been the primary drivers of the surge in lumber prices.
- M&A activity in the ENC&BP sector is expected to continue to accelerate over the next twelve months as firms see favorable economic forecasts, the threat of a new tax regime and increased public sector infrastructure spending. Increasing costs for skilled labor is expected to provide additional upward momentum for M&A activity as firms make acquisitions and investments in technology and automation to reduce labor and overhead costs.