The Daily Dig
Nonresidential construction spending fell 1.5% in May on a seasonally adjusted annualized basis, landing at $1.267 trillion, according to an Associated Builders and Contractors analysis of new Census Bureau data. Eleven of the 16 nonresidential subcategories still posted monthly gains, but the overall trend kept sliding.
Private nonresidential spending dropped 0.3% for the month and has now fallen for seven consecutive months. It sits 6.6% below where it was a year ago. Public nonresidential spending moved the other direction, up 0.4% in May.
ABC Chief Economist Anirban Basu pointed to the wind-down of CHIPS Act-supported manufacturing projects as the main drag on the segment. Warehouse construction has now fallen for three straight months after appearing to stabilize early in 2026, and it sits 8.5% below last year. Office construction is worse off, down 11.9% since May 2025 and, in Basu's words, in a state of freefall.
A few categories are still growing, including amusement and recreation and religious construction. Basu noted those segments are too small to offset losses in the larger categories carrying the market down. Data centers are doing most of the heavy lifting instead. ABC's latest Construction Backlog Indicator shows contractors with data center work are sitting on 11.6 months of backlog, compared to 8.6 months for those without it.
Snapshot:
Report: ABC Nonresidential Construction Spending Analysis
Data Source: U.S. Census Bureau
Report Date: July 1, 2026
Period Covered: May
Total Nonresidential Spending: $1.267 trillion (seasonally adjusted annual rate)
Monthly Change, Total Nonresidential: -1.5%
Private Nonresidential Change (Monthly): -0.3%
Private Nonresidential Change (Year over Year): -6.6%
Public Nonresidential Change (Monthly): +0.4%
Warehouse Spending (Year over Year): -8.5%
Office Spending (Year over Year): -11.9%
Data Center Backlog: 11.6 months
Non-Data Center Backlog: 8.6 months
Growing Categories: Amusement and recreation, religious
Declining Drivers: Manufacturing, warehouse, office
TheJobWalk Thoughts
The backlog gap between data center contractors and everyone else is a sourcing signal. Firms without a foothold there are watching a smaller pool of GCs and specialty trades absorb the healthiest pipeline in the market, and that gap only gets harder to close as the segment tightens. Getting prequalified with data center developers and EPCs now, before the next wave of announcements hits, is worth more than chasing one more office bid.
Office spending has been under pressure for more than a year, and warehouse just resumed its decline after briefly looking stable. Subs and GCs leaning on either sector should be building a diversification plan now, not waiting for a rebound that hasn't shown up yet.
The CHIPS Act wind-down is also worth watching past the manufacturing headline. Firms that built out self-perform crews and estimating chops around power distribution, process piping, and cleanroom work on those projects have technical trades experience that transfers directly to data center builds. That overlap in MEP, controls, and commissioning work is a real pivot path, not a stretch.
