Technology Giving Boost to Booming Construction Industry | ETF Trends

The passage of the sprawling infrastructure bill will be a boon for the construction industry for years to come, but it’s not the only thing that will help boost the industry even higher. Technology has become increasingly important within construction, particularly in the midst of supply chain issues and labor shortages for small- and mid-cap companies, reports

While the market and demand for construction has slowly been recovering, supply chain issues created from the pandemic as well as large shortages of skilled workers have left many of the midsize and smaller companies struggling. Technology is proving to be the bridge across the difficulties, enabling a level of automation and streamlining that has brought efficiency and helped to speed up the design process with 3D tools such as virtual reality.

Construction companies, particularly small and midsize ones, are leaning heavily on technology to both streamline the customer experience and also help find and recruit the necessary skilled labor for jobs. Improvements to automation have allowed for a smooth, automated billing experience for customers, and they have also helped to streamline the order of job routing, electronic point of sale, and beyond.

Verizon recently did a small business survey that found that 63% of small and midsize companies have reported going digital this year, a 10% increase from last year, and a huge uptick in both purchasing and incorporating high-capacity internet as a compensation for labor shortages. It’s an important shift, as the Associated Builders and Contractors have placed labor hiring needs at 430,000 for this year, and over 1 million more in the next two years.

Technology offers a lot of potential and promise for the construction industry going forward, including 3D applications and incorporating AI to optimize the labor needed at various points of a project, thereby bringing down costs. Innovations in technology have meant that small- and mid-cap companies have been able to weather the changes wrought by the pandemic and bounce back faster than they would have otherwise, and the construction industry is no exception.

Invesco Offers Exposure to the Growth of the Construction Industry

The Global Construction Perspective and Oxford Economics report estimates that the global market worth of the construction industry will be valued at over $8 trillion by 2030. For investors looking to gain exposure to the growth potential within construction, the Invesco Dynamic Building & Construction ETF (PKB) is an excellent option.

PKB utilizes a full replication strategy to seek to track the Dynamic Building & Construction Intellidex Index, an index that is compiled and maintained by ICE Data Indices. The index contains companies that primarily provide construction and related engineering services for building or remodeling residential properties, industrial, or commercial buildings, and for working on large-scale infrastructure projects. These can include highways, bridges, tunnels, dams, power lines, and airports.

In addition, the companies also can be manufacturers of building materials that are used for general construction and home improvement; makers of specialized machinery used in construction; businesses that do maintenance, installation, or repair work; and land developers.

Current market cap allocations include 19.99% weighting in large-cap blend securities, 25.70% in mid-cap blend securities, and 24.69% in small-cap blend securities, with smaller allocations to growth or value within all three caps.

PKB carries an expense ratio of 0.50% and currently has 31 holdings.

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