U.S. Export Price Index Surges 2.8% YoY: Navigating Sector-Specific Opportunities in a Shifting Trade Landscape

The U.S. Export Price Index (YoY) surged 2.8% in June 2025, marking the largest annual rise since early 2025. This data point, while seemingly broad, reveals a nuanced economic story: nonagricultural exports (up 2.9%) and agricultural exports (up 1.5%) both contributed to the growth, but the underlying sectoral dynamics diverge sharply. For investors, this divergence demands a granular approach. The Construction and Engineering sectors are gaining tailwinds from domestic stimulus, while Passenger Airlines face headwinds from export price volatility and macroeconomic pressures.

Construction & Engineering: A Policy-Driven Tailwind

The 2.8% YoY export price growth masks a critical trend: U.S. infrastructure spending is accelerating. Under the re-elected Trump administration, policies such as expedited federal permits for energy and infrastructure projects have catalyzed a boom in construction activity. The Infrastructure Investment and Jobs Act (IIJA) and Inflation Reduction Act (IRA) are fueling demand for industrial, energy, and transportation projects, with manufacturing construction spending doubling since 2021.

For example, liquefied natural gas (LNG) terminal construction has surged, driven by geopolitical realignments and energy export ambitions. Companies like Bechtel Group and Fluor Corporation are securing contracts for these projects, while regional engineering firms specializing in renewable energy infrastructure (e.g., solar and wind) are also benefiting. The sector's fundamentals are robust: employment hit 8.3 million in July 2024, and government stimulus is expected to offset high interest rates and labor shortages.

Investors should prioritize infrastructure-focused ETFs (e.g., XLB) and engineering services firms with exposure to energy and manufacturing projects. Additionally, firms leveraging AI and automation (e.g., Autodesk) to optimize construction workflows are well-positioned to address productivity gaps.

Passenger Airlines: Navigating Export Price Headwinds

In stark contrast, the airline industry is grappling with a paradox: while June 2025 saw a 7.6% spike in export air passenger fares, the 12-month decline of 2.0% reflects deteriorating pricing power. This volatility is tied to the U.S. terms of trade with China (down 3.0% in June) and a broader slowdown in international demand.

The sector's challenges are multifaceted. Rising tariffs on imported materials are increasing operational costs, while geopolitical tensions and a strong dollar are dampening overseas bookings. For instance, Delta Air Lines (DAL) reported a 15% drop in international capacity in Q2 2025, reflecting a strategic pivot to protect margins. Meanwhile, fuel costs, though down 13% YoY, remain a wildcard given oil price fluctuations.

Investors should adopt a cautious stance in this sector. While premium and international routes show resilience, domestic demand is softening. Consider hedging exposure by allocating to regional carriers less sensitive to global trade shifts or air freight firms (e.g., DHL), which saw a 1.0% increase in June. Avoid overexposure to legacy carriers with high debt loads and limited flexibility.

Strategic Sector Allocation in a Trade-Sensitive Environment

The U.S. Export Price Index's 2.8% YoY rise underscores a shift toward domestic economic nationalism. For investors, this means rebalancing portfolios to favor sectors aligned with policy tailwinds. Construction and Engineering firms, particularly those with government contracts or energy expertise, offer asymmetric upside. Conversely, Passenger Airlines require a defensive approach, with a focus on cost control and niche segments.

Key actionable steps include:
1. Overweight infrastructure and engineering ETFs (e.g., XLB, PIA) to capitalize on federal spending.
2. Underweight legacy airline stocks and consider short-term hedging via options or inverse ETFs.
3. Monitor trade policy developments, especially tariffs on steel and aluminum, which could exacerbate cost pressures for airlines.

The data is clear: while the U.S. export landscape is evolving, sector-specific strategies can unlock value. Investors who act decisively—prioritizing policy-aligned sectors and hedging against trade risks—will navigate this complex environment with confidence.