Data center boom masks decline in private nonresidential construction

Recent data indicates a significant divergence in the construction sector, where a surge in data center development is masking broader declines in private nonresidential construction spending. According to an analysis by Associated Builders and Contractors (ABC) of U.S. Census Bureau data, nonresidential spending rose slightly by 0.1% in June, but private nonresidential spending has fallen nearly 5% compared to the previous year.

ABC chief economist Anirban Basu noted that when excluding data centers, private nonresidential construction spending has declined 7.9% year-over-year. Manufacturing construction saw the most substantial drop, falling 21.4% from June 2025. In contrast, data center construction grew 7% in June and has increased 46% over the past year.

The industry is also facing a shrinking workload. The ABC Construction Backlog Indicator fell to 8.0 months in July, the lowest level since January. This decline was observed across all industries, regions, and company sizes. Contractors specialized in data centers maintain a significantly higher backlog, averaging 11.4 months, compared to 7.5 months for those not involved in the sector. Small and mid-size contractors have been particularly affected, with backlogs in the $30-$50 million revenue category reaching their lowest levels since March 2020.