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Bank Of America Learns Hotel Construction Is Expected To Fall, Finds Bull Market Potential In Key 'Swing Factors'

Garrett Cook

Hotel construction forecasts are down across the board for 2015, with IHS Group Insight expecting the largest downward growth change, going from +21.8 percent in 2014 to +12 percent in 2015.

Bank of America analyst Timna Tanners said in a note on Wednesday morning that "the consistent overall downward revisions to non-res spending highlight the persistently disappointing pace of the non-res recovery."

Non-residential construction is expected to pick up on the heels of increased loan demand. Bank of America surveyed banks in July and found 31 percent of those banks indicted witnessing rising demand for commercial and industrial loans for large/medium firms.

The release states that hotel growth rates will drop off right in time as the gaming sector cools, Macau falls out of favor and airliners teeter between in-favor and out-of-favor.

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As for swing factors, Bank of America said, "the biggest swing factors in the lower 2014 outlook were in the institutional, health, education, religious, public safety, and amusement/recreation categories."

No ETFs currently exist for Non-Residential Construction, however, ISE offers a Global Engineering & Construction Index Fund (NYSE: FLM) that gives investors and traders exposure to the expected growth in industrials; the FLM ETF is heavily weighted to the industrials thanks to holdings in McDermott International (NYSE: MDR)  and Fluor Corp.

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