Data Center Construction Drives US Building Spending Growth

Investment in artificial intelligence infrastructure is reshaping the US construction industry, with data center projects generating substantial spending growth while several traditional building sectors contract. Census Bureau figures published in October 2026 show private data center construction spending reached an annualized pace of $84.95 billion in August, up 73% from $49.05 billion a year earlier.

The expansion is creating opportunities for contractors and entrepreneurs serving data center construction sites, including catering businesses. However, economic data compiled by multiple industry analysts shows that the gains remain concentrated in digital infrastructure, electricity-related projects and selected advanced manufacturing investments.

According to the Census Bureau's construction spending data, data centers accounted for approximately 63% of private office construction spending, compared with 47% a year earlier. Their annualized construction spending exceeded the general office category by $39.1 billion, the widest gap since the series began in January 2014.

General office construction spending stood at $45.8 billion on an annualized basis, down 9.7% year over year and 34.8% from January 2023. Data center construction spending has exceeded general office spending every month since September 2025, according to the figures reported by Tom's Hardware.

The August data also showed that private nonresidential construction spending totaled $773.0 billion on an annualized basis, down 1.0% from a year earlier. Excluding data centers, spending fell to $688.1 billion, a 5.9% annual decline. Data centers contributed $5.9 billion, or 74%, of the $8.0 billion monthly increase in private nonresidential construction spending.

Power construction provided another source of growth, increasing 9.7% year over year. Manufacturing construction, by contrast, declined 19.8%, leaving data center construction spending at roughly half the size of the manufacturing category.

Separate figures cited by writer Derek Thompson, drawing on data from Harvard Kennedy School economist Jason Furman, showed data center construction growth of 64.5% over the most recent year. New energy infrastructure spending rose 4.1%, while multifamily housing fell 5.6%, health care and commercial retail construction each declined 10.1%, educational construction dropped 12.6%, and manufacturing construction contracted nearly 24% between 2025 and 2026.

The concentration of activity has also changed the outlook for contractors, according to Construction Dive. Michael Guckes, chief economist at ConstructConnect, described the market's instability and the importance of selecting the right project categories.

"This year has been particularly volatile," said Michael Guckes, chief economist at ConstructConnect.

Projects valued above $1 billion now account for about one-quarter of nonresidential construction spending, Guckes said. Large projects have also contributed to sharp monthly swings, with total construction starts declining in August after major data center and manufacturing projects lifted activity in July.

Guckes said traditional indicators increasingly reflect the timing and characteristics of individual megaprojects rather than broader economic conditions.

"To a degree not previously experienced, traditional indicators are being swayed more by large project construction timing and peculiarities than from broad economic indicators," said Michael Guckes, chief economist at ConstructConnect.

Contractors with data center awards have substantially larger backlogs than companies without such projects, illustrating the advantage enjoyed by firms capable of securing major contracts.

Juan Arias, national director of US industrial analytics at CoStar, said the strongest construction activity remains concentrated in industries linked to digital infrastructure and power generation.

"The construction market appears strong in areas connected to infrastructure, power, advanced manufacturing and data centers," said Juan Arias, national director of US industrial analytics at CoStar.

Arias said semiconductor projects and investments in communications equipment, electronics and electrical infrastructure have helped support growth. Other manufacturing segments, including chemical and automotive production, remain below year-earlier levels, while overall manufacturing construction has retreated from its 2024 and 2025 peaks.

He highlighted the uneven distribution of investment across manufacturing and construction.

"What stands out the most is the concentration of growth in construction and manufacturing around digital infrastructure and power-related investments," said Juan Arias, national director of US industrial analytics at CoStar.

Although the expansion has created demand for supporting services, including food providers operating at construction sites, its durability remains uncertain. Planning for data center construction cooled month over month in August, according to Dodge Construction Network, raising questions about whether other projects can sustain activity if data center growth slows.

Adam Raimond, program manager at construction data provider Gordian, said the slowdown was not entirely unexpected but could concern companies relying on continued growth in data center projects.

"The cooldown wasn't completely out of left field," said Adam Raimond, program manager at Gordian.

Construction costs have added to the pressure. An analysis from Associated Builders and Contractors found that construction input prices increased 1.2% month over month in August and stood 8.9% above August 2025 levels. Metal and petroleum products recorded some of the largest annual increases, while switchgear and copper wire also became more expensive.

Raimond said rising costs have made the industry's outlook less stable than it appeared earlier in the year.

"The overall health of construction right now doesn't feel as steady as it did at the start of the year," said Adam Raimond, program manager at Gordian.

Michael Guckes warned that labor shortages, changing material prices and supply chain difficulties could erode contractors' profits even when they have substantial work secured.

"Margin protection is the key," said Michael Guckes, chief economist at ConstructConnect.

The Census Bureau's construction figures measure the value of building work completed and exclude spending on server racks and servers installed inside data centers. They also classify power plants and transmission lines separately from data center buildings, meaning the reported construction totals do not capture the full cost of developing AI infrastructure.

The Census Bureau defines data center construction as including buildings that house equipment used to store, process and transmit digital information. The category's rapid expansion has made it the majority of private office construction spending.

In discussing the broader economic outlook, Thompson's analysis described the policy concept of "abundance" while noting that AI-related investment had become a dominant source of construction growth. The extent to which this momentum can continue remains a central uncertainty as investors question the sustainability of AI spending.

September construction spending figures are scheduled for release on November 2, 2026, providing the next official update on whether the rapid expansion in data center construction continues.