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US nonresidential construction data has shown particular resilience lately, rising close to record highs on a YoY basis. Gauges of both private and public spending have been surging, as expenditures on major categories like manufacturing facilities and highways lead the way. Despite a softening in residential spending, shares of firms focused on homebuilding have outperformed their industrial counterparts in the year to date period.

Industrial sector firms in the construction business could face headwinds in months to come, however, as commercial real estate (CRE) and construction lending becomes more constricted at small to mid-sized US banks. High interest rates have already begun to dry up access to capital, and overexposure to CRE and construction is becoming a significant regulatory issue for hundreds of depository institutions.

Related ETFs: First Trust RBA American Industrial RenaissanceTM ETF (AIRR), Global X U.S. Infrastructure Development ETF (PAVE)

Last week, data from the US Census Bureau showed that construction spending jumped by 1.2% on a monthly basis in April – a third straight gain for that metric. The gain was largely led by expenditures on nonresidential construction, which rose 1.9% MoM and a staggering 25.3% YoY. That was just shy of a series high, reached in October 2007. The largest segment of nonresidential spending, manufacturing construction, jumped 8.6% in April and more than doubled over the past year, soaring by 103.8%. Residential construction, by contrast, rose just 0.4% MoM and slid further into negative territory on an annual basis, declining by -9.1%, a four-year low.

Though private spending rose at almost double the pace of public spending YoY, the latter category did hit its own series high in April, rising 16.8%. Nearly a third of April’s public nonresidential spending was wrapped up in the highway and street category (the largest single category by far), which grew 21.6% YoY. In mid-May, the White House noted that the Biden Administration has announced over $220 billion in infrastructure funding as part of the 2021 Infrastructure Investment and Jobs Act, including over 32,000 specific projects and awards. That package includes $40 billion for bridges alone – the largest dedicated investment in bridges ever. Those funds are…

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