U.S. nonresidential construction spending declined in May, highlighting continued weakness across much of the private construction market despite ongoing strength in data center development.

According to an analysis by the Associated Builders and Contractors (ABC) of newly released U.S. Census Bureau data, national nonresidential construction spending fell 1.5% in May to a seasonally adjusted annual rate of $1.267 trillion.

While 11 of the 16 nonresidential construction categories posted monthly gains, the broader market remained under pressure as private-sector investment continued to soften.

Private nonresidential construction spending decreased 0.3% in May, marking the seventh consecutive monthly decline. Compared to the same period last year, private spending is now 6.6% lower.

Public nonresidential construction spending provided some stability, increasing 0.4% during the month.

According to ABC Chief Economist Anirban Basu, much of the slowdown continues to stem from declining manufacturing construction activity as projects supported by the CHIPS Act move toward completion.

Although several smaller sectors continue to perform well, they have not been enough to offset broader market weakness.

Amusement and recreation construction remains one of the strongest-performing categories, while spending on religious facilities has also rebounded over the past year.

However, these sectors represent only a small share of total nonresidential construction activity.

Several larger construction segments remain under significant pressure.

Warehouse construction spending, which appeared to stabilize earlier in 2026, has now declined for three consecutive months and is 8.5% lower than a year ago.

The office market continues to struggle, with general office construction spending falling 11.9% since May 2025 as demand for new office space remains subdued.

One of the few consistently strong areas of the market remains data center construction.

According to ABC’s latest Construction Backlog Indicator, contractors working on data center projects report average backlogs of 11.6 months, compared to 8.6 months for firms without data center work.

The growing demand for digital infrastructure continues to provide opportunities for contractors despite broader market uncertainty.

While public investment and selected specialty sectors continue to support portions of the market, private nonresidential construction remains challenged by slowing manufacturing investment and weakness across several major building categories.

For now, data centers remain the industry’s strongest growth engine, providing longer project pipelines and helping offset broader declines in nonresidential construction spending.

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