Data Center Construction Spending Accelerates at 149% Annualized Pace

Economic Outlook Data Center Construction Spending Accelerates at 149% Annualized Pace ABC analysis shows August spending jumped 7.5% as data center boom outpaces much of nonresidential construction ENR AT-A-GLANCE 5 Things to Know EXPAND ↓ COLLAPSE ↑ U.S. data center construction spending has increased at a 149% annualized pace since March as investment in the sector accelerates, according to Associated Builders and Contractors. Data center construction spending jumped another 7.5% in August and is now more than 73% higher than a year earlier, ABC Chief Economist Anirban Basu says. National nonresidential construction spending rose 0.7% in August to a seasonally adjusted annual rate of $1.309 trillion, marking a fifth consecutive monthly increase. Manufacturing construction spending increased on a monthly basis for the first time since January, while several public construction categories also posted gains. Basu expects construction momentum to remain concentrated in data centers and power as renewed materials and labor cost escalation and higher Treasury yields increase pressure on project costs and borrowing. Data center construction spending jumped 7.5% in August, extending a building surge that continues to outpace much of the U.S. construction market, Associated Builders and Contractors said Oct. 1. Spending on data center construction is now more than 73% above its year-earlier level, ABC said in its analysis of new U.S. Census Bureau data. Overall nonresidential construction spending increased 0.7% from July to a seasonally adjusted annual rate of $1.309 trillion. Nonresidential construction spending increased 0.7% in August, with power up 8.5% year over year while manufacturing remained 19.2% below its August 2025 level. Click to enlarge. The acceleration has been particularly pronounced since March. ABC calculates that data center construction spending has increased at a 149% annualized pace over the past five months. The figure expresses the recent growth rate as though it continued for a full year; it does not mean spending has increased 149% since March. “Frankly, it’s becoming difficult to contextualize the size and speed of this boom,” ABC Chief Economist Anirban Basu said in a statement. Associated General Contractors’ analysis of July Census data showed data center construction spending was already up 57.2% year over year, while other private office construction fell 10.6%. By August, ABC’s analysis puts the data center year-over-year increase at more than 73%. The Census spending data measure the value of construction put in place rather than the value of newly started projects. An ABC survey released Sept. 15 found roughly one in six member contractors had data center work under contract, the highest share recorded by the group. Those contractors reported 9.9 months of backlog in August compared with 8.3 months for contractors without data center work. Data center construction is also intensifying competition for workers. In an AGC-NCCER workforce survey, 28% of respondents reported performing data center construction during the past year. Of those firms, 58% said the work had increased competition for skilled workers. Looking for quick answers on construction and engineering topics? Try Ask ENR, our new smart AI search tool. Ask ENR → Boom Masks Broader Weakness Manufacturing construction spending increased 0.2% from July, its first monthly gain since January, but remained 19.2% below its year-earlier level, according to ABC’s analysis. Power construction increased 0.8% for the month and 8.5% from August 2025, while highway and street spending gained 0.2% for the month and 4.6% year over year. Nonresidential construction spending reached a $1.309-trillion annual rate in August, continuing a rebound from declines earlier in 2026. Click to enlarge. Basu said he expects construction momentum to remain concentrated largely in data center and power projects in coming months. Construction input prices increased 1.2% in August and were 8.9% above their year-earlier level, according to a separate ABC analysis of Bureau of Labor Statistics data. The higher costs are already affecting projects. In an AGC survey conducted in July and August, 55% of respondents said projects had been canceled, postponed or scaled back during the previous six months, with one-third attributing disruptions to rising costs. Basu said labor and material cost escalation has reemerged during the second half of 2026 and rising Treasury yields will continue to put upward pressure on borrowing costs. Despite contractors’ optimism about sales, he expects those sales to be increasingly concentrated in a narrow set of construction categories.