Dive Brief:
- Total construction spending in August increased 0.9% month over month to a seasonally adjusted annual rate of $2.2 trillion, according to a U.S. Census Bureau report released Thursday.
- Both private nonresidential and public construction spending in August ticked up 1% and 0.2% respectively month over month, according to the government data.
- Data center construction spending jumped another 7.5% month over month in August. Spending in the sector is now up more than 73% over the past 12 months and 149% since March on an annualized basis, according to Associated Builders and Contractors.
Dive Insight:
The pace of data center construction spending is still in a league of its own.
Apart from its monthly surge, construction spending on the artificial intelligence buildout has skyrocketed over the past four months, said Anirban Basu, ABC chief economist.
“Nonresidential construction spending increased for the fifth consecutive month in August as data center investment accelerates,” said Basu in the release. “Frankly, it’s becoming difficult to contextualize the size and speed of this boom.”
Several other construction segments posted strong spending growth in August as well, according to ABC. On a monthly basis, spending jumped in 11 of the 16 nonresidential categories, including manufacturing construction for the first time since January, said Basu.
“Despite this broad improvement, momentum will likely remain confined to the data center and power categories in the months to come,” Basu said. “Materials and labor cost escalation have reemerged during the second half of 2026, and the recent surge in Treasury yields will continue to put upward pressure on borrowing costs.”
A report from the Associated General Contractors of America also noted the August improvement to construction spending is at risk of a reversal. Association officials warned the short-term federal highway funding extension that kicked in Thursday does not include funding for key programs, which will lead to a drop in federal infrastructure funding.
“It is encouraging to see several construction segments stabilized or turned positive in August,” said Ken Simonson, AGC chief economist. “However, all of these categories remain at risk of stagnating or shrinking as workforce shortages continue to grow, materials costs and interest rates continue to increase, and gridlock in Congress continues to undermine federal funding for highway and transit programs.”
