Industrial Logic: Recovery under construction

Research evidence excerpt

Industrial Logic: Recovery under construction

Deutsche Bank

Research

Europe Industry Date

28 June 2026

Capital Goods Industrial Logic

Electrical Equipment Periodical

Recovery under construction

Gael de-Bray, CFA

Chart of the week: US non-resi construction spend vs. ABI Research Analyst

Another casualty of growing inflationary pressures is the US buildings market with +33-1-4495-6562

the recovery set to be pushed to the right. US non-residential construction spend

John Kim

peaked in 2023, with momentum fading as the 2022/23 rate-hiking cycle fed Research Analyst

through. Growth has been broadly flat to slightly negative since late 2024. Although +44-20-754-18699

rates have been cut by 175bps since, the easing cycle has been slow, and renewed

Nabil Najeeb

inflation pressure has complicated the outlook, with DB economists now

Research Analyst

forecasting two rate hikes this year. For this week’s chart, we compare the

+44-20-754-17410

Architecture Billings Index (ABI), a lead indicator for US non-resi construction, with

growth in non-resi spend. The ABI has typically led spend by around 12 months, and Lars Vom-Cleff

the signal is not encouraging. It has been mostly below 50, or in contraction Research Analyst

+49-69-910-13526

territory, since July 2023, and after a brief Q1 improvement, fell sharply to 44.5 in

May from 49.8 in March. In our universe, the two most exposed are Assa Abloy and Seetharaman Ramakrishna

Legrand. That said, the ABI does not capture data center activity. The Dodge index Research Associate

remains a better read-through there and continues to show solid momentum,

supporting our expectation that Schneider, Legrand and ABB will all upgrade their

organic growth targets for FY26 with Q2 results.