This audio is automatically generated. Please let us know if you have any comments.
Dive brief:
- Total construction spending in August rose 0.9% month over month at a seasonally adjusted annual rate of $2.2 trillion, according to a US Census Bureau report released Thursday.
- Both private nonresidential spending and public construction spending in August rose 1 percent and 0.2 percent, respectively, month-on-month, according to government data.
- Expenditure on the construction of data centers it rose another 7.5% month-on-month in August. Spending in the industry is now up more than 73% in the past 12 months and 149% since March on an annualized basis, according to Associated Builders and Contractors.
Diving knowledge:
The pace of data center construction spending is still in a league of its own.
Apart from its monthly increase, construction spending on AI construction has soared over the past four months, said Anirban Basu, ABC’s chief economist.
“Nonresidential construction spending rose for the fifth straight month in August as data center investment accelerates,” Basu said in the statement. “Frankly, it’s becoming difficult to contextualize the size and speed of this boom.”
Several other construction segments also posted strong spending growth in August, according to ABC. On a monthly basis, spending rose in 11 of 16 non-residential categories, including manufacturing construction for the first time since January, Basu said.
“Despite this broad-based improvement, momentum is likely to remain limited to the data center and power categories in the coming months,” Basu said. “Materials and escalating labor costs have resurfaced during the second half of 2026, and the recent rise in Treasury yields will continue to put upward pressure on borrowing costs.”
A report from the Associated General Contractors of America also noted August’s improvement in construction spending with risk of reversal. Association officials warned expanding short-term federal highway funding that began Thursday does not include funding for key programs, which will lead to a drop in federal infrastructure funding.
“It’s encouraging to see that several segments of construction stabilized or turned positive in August,” said Ken Simonson, chief economist at AGC. “However, all of these categories remain at risk of stagnation or shrinking as labor shortages continue to grow, material costs and interest rates continue to rise, and gridlock in Congress continues to undermine federal funding for highway and transit programs.”
