行业聚焦——第三季度建筑产品市场更新

Consumer Confidence in Turbulent Times: The Recession WorryConsumer sentiment hits all-time low, raising concerns of a looming recession Thoughts for theThird Quarter Market Observations The trends impacting the constructionecosystem continue to be dynamic, withpublic sector work benefitting fromincreased federal spending legislation,while the private sector grapples withmeaningful challenges. On the supplyside, while some specific pockets remainconstrained, lead times have broadlyand meaningfully improved. In addition,labor challenges have somewhat eased,but remain tight for the time being Public sector construction work isexperiencing benefits fromincreased federal spendingMarket uncertainty has drivenmany acquirers to “stay in theirlanes”Construction materials haveexperienced significant priceincreasesSpecific industries continue toexperience headwinds andchallenges stemming fromvarious factors Despite market challenges anddownturns, we are witnessingpockets of resilience. projects are either pushed back or puton hold as high rates combine withmeaningful vacancies and loomingcommercial credit challenges to createpowerful headwinds. In the residentialmarket, demand for new construction (although declines in demand mayprovide partial relief in certain markets).Demand for new construction continuesto vary significantly by end market. Manycommercial construction projects arenearing completion, while new is depressed by the rate enviroNAent.These headwinds are partially offset byvisible strength in both industrial andpublic construction driven by reshoring,repatriation of production, andgoverNAent investment. In the repair andremodel markets, we anticipate a shift inresidential demand towards increasedDIY projects. This is influenced by historiclows in existing home sales and reduceddemand for large-scale projects in which acquisitions. While buyer scrutiny is high,buyer emotions are running even higher.Fear is more pervasive and has put anever-growing emphasis on the visibility offorward demand. Inflation The construction industry's rollercoasterride with material prices shows no signsof slowing down. Predictions for 2024indicate a potential decrease in prices forkey input commodities, but they willremain significantly elevated compared tothe pre-pandemic levels. Since the onsetof the COVID-19 pandemic in 2020,construction materials have experiencedsubstantial price increases, withapproximately 82.5% of them seeingcosts rise by an average of 19%. Whilethere has been some price softening, Industrial and public constructionthrive with reshoring andgoverNAent investment. homeowners may need to accessexternal credit. In the commercialrenovation markets, repurposing officebuildings remains the topic of the day, butis still stymied by the meaningfulcomplexity of such projects. Construction material prices remainunpredictable with potentialdecreases in 2024. Mergers & Acquisitions notably in materials such as lumber, thepossibility of prices rising again loomslarge if construction activity accelerates.This could establish a new, higher pricenorm, creating further challenges for theindustry. Market uncertainty has driven manyacquirers to “stay in their lanes”, while ahigher cost of debt has limited buyers'ability to pay and driven increasedconservatism towards potential it has not materialized. Nevertheless,certain sectors, such as construction,commercial real estate, housing, andmore recently the automotive industry,continue to face challenges driven byconstrained labor availability, elevatedinterest rates, and tightening creditconditions. Recession Expectations As we head into the final weeks of2023, the macro economy continuesto improve slowly. While there is somesluggishness and malaise, it has beenfar more resilient this year than manyexpected. While a recession seemedlikely in the second half of last year, Building Products Market Leading Indicators Building Products End Market Performance The economy faces high-interest rates, a 3.0%+ Consumer Price Index, and challenges from wage hikes. Public Building Products Manufacturers & Distributors Public Building Products Manufacturers & Distributors (Cont’d.) Industry Takeaways 2023 Market Outlook “While the near-term demand for the repair and remodel market remains uncertain, we will stayfocused on controlling what we can by closely managing costs, minimizing the impact of lowervolumes and driving our margins back to at least 2019 levels of 18% in each segment.” - Keith J. Allman, President, CEO & Director, Masco Corporation “In the present industry downturn, we are managing the controllable aspects of our business whileadjusting to regional market conditions. In all of our geographies, elevated interest rates andpersistent inflation are restricting consumer discretionary spending, resulting in postponedremodeling projects and new home purchases. Similar pressures are beginning to reducecommercial investments as business sentiment