
Crews work on Meta’s data center project in Temple, Texas.
Courtesy of Meta
Data centers are “perhaps the only remaining source of
industry momentum” as most private sectors pulled back in March,
according to ABC’s chief economist.
Dive Insight:
Nonresidential construction spending fell 0.5% in March to a
seasonally adjusted annual rate of $1.25 trillion, retreating
from February’s record-setting high, according to an Associated
Builders and Contractors analysis of U.S. Census Bureau data
released Thursday.
Spending declined in 11 of the 16 nonresidential subcategories,
with private nonresidential construction dropping 0.8% and
public nonresidential spending slipping 0.2%, according to the
report.
Data centers remain the primary driver of private construction
growth, while high borrowing costs, lending constraints and
trade uncertainty continue to stall broader market activity,
said Anirban Basu, ABC chief economist.
Dive Insight:
Nonresidential construction spending tumbled in March after
reaching an all-time high in February, with declines seen across
nearly all private categories, said Ken Simonson, chief
economist of the Associated General Contractors of America.
“Media reports and corporate announcements suggest owners are
hesitant to start new projects in light of uncertainty over
tariffs, government funding and other policy upheavals,” said
Simonson. “Spending has slowed over the past year and as current
projects wind down, there may be several months of declining
construction activity.”
That caution is already materializing in the data, said Basu.
Even manufacturing construction, a key growth area last year,
lost steam in March.
“Nonresidential construction spending fell sharply in March,
with declines spread across virtually every private subsector,”
said Basu. “Data center investments, which accounted for more
than 70% of the increase in private nonresidential construction
spending between March 2024 and March 2025, are perhaps the only
remaining source of industry momentum.”
Nevertheless, ABC data shows public nonresidential spending
remains up 4.8% year over year, while private nonresidential
spending ticked up just 1.6% over the same period.
“Given unprecedented economic uncertainty, spending is unlikely
to rebound in the coming months,” said Basu. “While a majority
of contractors surveyed in March were still optimistic about
their future sales, according to ABC’s Construction Confidence
Index, sentiment is likely to falter as the effects of tariffs
begin to raise input prices and stall or cancel projects.”
The overall U.S. economy shrank 0.3% in the first quarter as
imports surged ahead of Trump administration tariffs, according
to Commerce Department data. The drop marks the first
contraction since the first quarter of 2022.
Source: constructiondive.com