Industrial and Power Construction Headline Top Sectors
The latest construction data shows that construction spending in industrial/manufacturing facilities and power generation are the two largest sectors in US construction. Although the growth rates for both are going up against difficult year-over-year comparisons, construction of manufacturing facilities was at a $232 billion annualized rate while power generation construction projects were producing more than $152 billion in spending at a 4.1% growth rate.
The Trump Administration has received commitments from private corporations and foreign sources of funding for nearly $5 trillion in committed foreign direct investment. The administration reports that it has received closer to $8 trillion or more in spending commitments. Much of this spending will take place in data centers and microchip manufacturing, but spending commitments are actually widespread across a number of different industrial sub-sectors.
Much of the spending is being earmarked for US expansion in the near-term, many projects have timeframes of less than 2-5 years. With this investment and spending being heavily front-loaded, it could challenge labor and material availability in the construction sector in 2026. Some estimates suggest that the industry could be 600K to 700K workers short of meeting demand over the next 5 years. Those figures would accelerate if this investment flows as expected.
Additional Reading: White House
The UK Trade Deal and What It Taught Us About New Opportunities
Many analysts downplayed the trade agreement struck between the US and UK. Most of them point to US export markets that were opened up for agriculture, automotive, defense, machinery and other industries totaling an estimated $23 billion a year in potential new, incremental export business. Compared to the $23 trillion economy, this $23 billion looks small and insignificant.
But many of the facilities that will handle this increase in export volume are not suited to those new volumes, nor are transportation and logistics systems that would be handling more outbound volumes headed out from US northeast ports. In addition, just this one deal alone will generate approximately $1 billion - $2 billion in additional transportation and logistics business. Depending on what those goods are, it will require more handling and multi-modal facilities, storage and warehousing near outbound ports, port infrastructure improvements sufficient to handle more volume, etc. Although these new export volumes are subject to the UK keeping its promise in the agreement, this new business (which is incremental) will force change in the US to accommodate it.
As is frequently mentioned, this trade deal with the UK is one of the easier ones to negotiate. The US had a trade surplus with the UK and the two trading partners are staunch allies, sharing defense, intelligence, and many national security commonalities. That this agreement could “unlock” more than $23 billion in opportunity is significant. And with 17 more agreements to follow (most of those with more egregious trading partners that are restricting US exports), the opportunities could be significant.
And lastly, most of these agreements remove the barriers to trade immediately, and new orders for those goods could flow immediately. These are not changes that will take decades to mature, they can happen within the next fiscal year.
Source: USTR
