TRG | The Bottom Line – 7/9

TRG this week published our Q2’21 Heavy Materials and Q2’21 Surety & Contractor Surveys, each providing a view of the construction market earlier in the value chain. Inflation remains a consistent theme, as is witnessed by the Construction Materials PPI hitting record highs. Perhaps the biggest sequential change has been building momentum in “traditional” commercial construction work, the type that typically follows residential construction. Vulcan Materials in a call hosted by TRG with institutional investors recently noted that volumes are picking up not only for warehousing and distribution center demand but also for “traditional” non-res construction that typically follows residential building out (i.e., gas stations, grocery stores, etc.). This is a consistent theme TRG has noted across a wide swath of markets. The largest private commercial contractors in the U.S. participating in our survey shared that construction activity currently remains robust, and despite rising costs, owners are pushing ahead on projects. The pace of new projects is strong and a handful of large contractors have backlog that provides visibility into 2H’22 and beyond.