U.S. private construction spending continued its downward trend in May
According to U.S. Census Bureau data and industry association analysis, private nonresidential construction spending fell 0.3% month-over-month in May and 6.6% year-over-year, marking seven consecutive months of decline, mainly dragged down by reduced manufacturing-related spending. Public nonresidential project spending edged up 0.4% month-over-month and rose only 0.3% year-over-year. Data center construction remains the primary growth engine, but warehouse and office spending fell 8.5% and 11.9% year-over-year, respectively. Industry groups are urging Congress to quickly pass new highway and transportation legislation to sustain momentum in public infrastructure investment.
Key Takeaways
- Nonresidential construction spending fell 3.8% over the past 12 months through May, according to an analysis by the Associated Builders and Contractors (ABC) of U.S. Census Bureau data.
- Private nonresidential spending slipped 0.3% month-over-month in May and declined 6.6% cumulatively over the past 12 months. ABC Chief Economist Anirban Basu said in a press release that the sector has declined for seven consecutive months, largely due to continued contraction in manufacturing-related construction spending.
- On a more positive note, public nonresidential project spending inched up 0.4% month-over-month in May, but rose only 0.3% year-over-year over the past 12 months through May.
Deeper Insights
Basu noted that data center projects continue to provide the main driver of construction spending growth. He said, "Currently, growth momentum remains highly concentrated in the data center sector. Contractors fortunate enough to secure data center projects have significantly higher backlog orders than their peers."
ABC data shows that contractors with data center contracts have an average backlog duration of 11.6 months, about three months longer than companies without such projects. However, Basu also mentioned that outside of data centers, private project spending has been sluggish for most of this year.
"Warehouse construction spending appeared to stabilize in early 2026, but has now declined for three consecutive months, with a year-over-year drop of 8.5%," Basu said. "General office projects remain in free fall, down 11.9% since May 2025."
On the other hand, according to a report by the Associated General Contractors of America (AGC), public construction spending, such as on highways or water infrastructure, has performed relatively well this year. To that end, AGC officials urged Congress and the White House to pass a new highway and transportation bill before the current law expires on September 30 to maintain this positive momentum.
"Highway construction is one of the strongest sectors in the construction market," said Ken Simonson, AGC's chief economist, in a press release. "Infrastructure investment is offsetting weakness in several private sectors."