TRG | The Bottom Line – 1/13

TRG’s quarterly “survey season” results are flowing in, this week marking the publication of our “Q4’22 Contractor & Surety Survey” and “Q4’22 Heavy Materials Survey.” If 2022 was the year focused on preserving margins, 2023’s focus will be on preserving volumes for the heavy materials industry. Inflation impact peaked and really started to be felt by July for the industry, and the remainder of the year was focused on shoring up margins through pricing actions and overall cost controls. Just as inflation peaked, the residential end market started to show signs of weakness, and as the year came to a close, heavy materials contacts reported December resi end market volume declines in the 15%-30% range on average. While single-family residential construction has cooled, multi-family construction, particularly in the southeast and southwest, continues to show growth. Against this backdrop, public/infrastructure and commercial outlooks remain bright, with infrastructure the clearest end market in 2023. Both our commercial contractor/surety and heavy materials contacts share that growth in the non-res/commercial end market continues to be driven by large, industrial construction projects. As a large, national commercial contractor shared, "Our backlog is at record levels. The number of mega projects is staggering. Many of these are industrial oriented (EV battery plants, chips)."