Data centers supplied all of the growth in U.S. nonresidential construction spending in July, according to new federal data and an analysis from Associated Builders and Contractors. Total U.S. construction spending fell 0.5% from June to a seasonally adjusted annual rate of $2.17 trillion.
Private nonresidential construction spending increased 0.4% for the month. ABC Chief Economist Anirban Basu said that increase came entirely from data center activity. When data centers are removed, nonresidential spending declined for a second consecutive month and reached its lowest level since September 2023.
Data center development has expanded rapidly as technology companies build infrastructure for artificial intelligence and cloud computing. Those facilities also drive spending outside the buildings because their electrical loads require generation, substations, transmission and distribution upgrades.
Associated General Contractors Chief Economist Ken Simonson said data centers, power projects and highway work are the three categories currently supporting construction spending. Each faces risks including skilled-worker shortages, political opposition, tariffs and uncertainty surrounding federal highway funding.
Highway construction spending declined 0.2% in July. The Infrastructure Investment and Jobs Act is scheduled to expire September 30, adding uncertainty for transportation contractors.
The July report shows a soft overall construction market alongside unusually strong data-center and power-infrastructure activity. The figures were cross-checked against Construction Dive's reporting and the U.S. Census Bureau construction-spending data.
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