Resilient Sectors in a Fragile Jobs Market: Where Growth Still Exists in 2025

In 2025, the global economy is navigating a paradox: while headline job market gains remain modest, certain underappreciated industries are defying the odds, driving employment and economic stability. These sectors—spanning industrials, infrastructure, and construction—are not merely surviving but thriving, anchored by structural trends like AI adoption, decarbonization, and policy-driven infrastructure spending. For investors, the challenge lies in identifying these resilient pockets of growth and positioning for long-term gains in a landscape where traditional metrics often obscure deeper opportunities.

Industrials: The Quiet Powerhouse of Economic Resilience

The industrials sector has emerged as a critical driver of employment and economic stability, outperforming the broader market with a 15.7% year-to-date gain on the Morningstar US Industrials Index. This growth is fueled by aerospace and defense, which accounts for nearly 25% of the US Industrials Index. Global demand for commercial aviation is surging, with the commercial aircraft fleet projected to nearly double by 2042 as older, less efficient planes are replaced. Defense spending, meanwhile, has been bolstered by geopolitical tensions in the Middle East, creating a tailwind for firms like Lockheed Martin (LMT) and Boeing (BA).

Beyond aerospace, farm and heavy machinery stocks are gaining traction. Precision agriculture technologies are transforming productivity, enabling farmers to optimize resource use and reduce waste. Companies like Deere & Co. (DE) and AGCO (AGCO) are benefiting from this shift, as are industrial products and distribution firms. These companies are also capitalizing on the AI-driven demand for data centers, which require robust infrastructure and logistics.

Infrastructure: Circular Economy and Data Centers as Structural Winners

The circular economy—a system where materials are reused rather than discarded—is gaining traction as a critical component of decarbonization strategies. Only 7% of used materials are currently cycled back into the economy, but this is expected to rise as landfill capacity dwindles. By 2030, 120 million tons of landfill disposal capacity will close, creating urgent demand for waste management, water treatment, and modular building solutions. Investors should look to mid-market players in this space, such as Waste Management (WM) and Republic Services (RSG), which are scaling operations through network effects and long-term contracts.

Data centers represent another underappreciated infrastructure sub-sector. AI adoption is accelerating demand for computing power, with data center energy consumption expected to rise from 3% of total US power demand in 2025 to 8% by 2030. While valuations for development-stage data centers remain high (multiples of 30x EV/EBITDA), stabilized assets in Tier I/II markets offer attractive core/core+ investment characteristics. Companies like Digital Realty (DLR) and Equinix (EQIX) are well-positioned to benefit from this trend, particularly as AI training workloads drive long-term capacity needs.

Construction: Talent Gaps and Technological Disruption

The construction industry is experiencing a renaissance, driven by government spending and technological innovation. The Infrastructure Investment and Jobs Act (IIJA) and the Inflation Reduction Act (IRA) have spurred spending on manufacturing, energy, and data center projects. Construction spending crossed $2 trillion in 2024, with employment reaching 8.3 million—a record high. However, the sector faces a 382,000 monthly job opening gap, exacerbated by an aging workforce and evolving skill requirements.

To address labor shortages, firms are adopting AI-enabled automation, robotics, and digital twins. Building Information Modeling (BIM) and digital twins are streamlining project coordination and reducing safety risks. For example, companies like Autodesk (ADSK) and Trimble (TRMB) are enabling construction firms to optimize workflows and improve margins. Meanwhile, private equity is increasingly active in the sector, with $14 billion invested in construction deals in 2024, focusing on clean energy and semiconductor manufacturing.

Policy and Geopolitical Tailwinds

Government policies are amplifying the growth of these sectors. The CHIPS and Science Act is driving demand for semiconductor manufacturing facilities, while the IRA's tax credits for renewable energy are boosting solar and battery storage projects. Trade policies, including tariffs on steel and aluminum, are also reshaping supply chains, favoring domestic producers. Investors should monitor these policy shifts, as they create both opportunities and risks for capital allocation.

Investment Strategy: Positioning for Long-Term Gains

For investors, the key is to align with structural trends rather than short-term volatility. Here's how to approach the opportunities:
1. Industrials and Aerospace: Overweight exposure to defense and precision agriculture firms, which benefit from secular growth and geopolitical tailwinds.
2. Circular Economy: Target mid-market infrastructure players with scalable, contracted business models. Look for companies with strong ESG credentials and long-term customer relationships.
3. Data Centers: Prioritize stabilized assets in Tier I/II markets with high-quality tenants. Avoid overpaying for speculative development-stage projects.
4. Construction Tech: Invest in firms leveraging AI, robotics, and BIM to address labor shortages and improve productivity.

Conclusion: Resilience in a Fragmented Market

While the broader job market remains fragile, underappreciated sectors like industrials, infrastructure, and construction are proving their resilience. These industries are not only driving employment but also aligning with megatrends such as AI, decarbonization, and digitalization. For investors, the path forward lies in identifying companies that are capitalizing on these structural shifts—those that are building the infrastructure of tomorrow while navigating today's challenges. In a world of uncertainty, these sectors offer a rare combination of stability, growth, and long-term value creation.