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Census Bureau’s First Estimates for Data Centers Show Outlays Jumped 69 Percent Since May 2023; New Breakout Reveals Private Office Construction Plunged 18 Percent in Latest 12 Months

Construction spending declined by 0.1 percent between April and May to a seasonally adjusted rate of $2.139 trillion, amid declines in demand for a range of nonresidential and residential construction projects. However, construction spending levels are up 6.4 percent compared to May 2023, according to an analysis by the Associated General Contractors of America released today of new federal data. Association officials noted that public construction demand was up 0.5 percent for the month, helping offset declines in other types of activity.

“The Census Bureau today responded to requests by the association and others to show data centers separately from the overall private office category,” said Ken Simonson, the association’s chief economist. “While the overall category slipped just 1.7 percent in the latest 12 months, that total hides a 69.0 percent jump in data center construction, which nearly offset an 18.5 percent plunge in spending on actual private offices.”

Spending on private nonresidential projects declined 0.3 percent on balance in May but rose 4.1 percent year-over-year. The largest private segment, manufacturing construction, grew 1.3 percent for the month and 20.2 percent over 12 months. Commercial construction fell 0.6 percent in May and fell 13.5 percent from a year earlier. Investment in power, oil, and gas projects slipped 0.8 percent in May, but rose 8.3 percent year-over-year.

Spending on private residential construction edged down 0.2 percent for the month but grew 6.5 percent year-over-year. Single-family construction fell by 0.7 percent but grew 13.8 percent year-over-year. Multifamily spending remained flat in May and fell 4.6 percent from May 2023.

Public construction spending grew 0.5 percent for the month and rose 9.7 percent from a year earlier. The largest public segment, highway and street construction, fell 0.5 percent in May but rose 9.2 percent over 12 months. Public educational spending grew 0.6 percent in the month and 6.6 percent over the year.

Association officials said new regulatory obstacles are keeping public-sector spending on construction from being even higher. They urged federal officials to look at ways to streamline the Build America review and waiver process to accelerate reviews for federally funded projects. They also continued to call for greater federal investments in workforce development to expose more people to construction career opportunities.

“Federal officials should be looking at ways to reduce the amount of time and red tape it takes to go from announcing funding for a project to construction starting for that project,” said Jeffrey D. Shoaf, the association’s chief executive officer. “At the same time, they should invest in encouraging and preparing workers to help build infrastructure and other construction projects.”