US Nonresidential Construction Spending Edges Higher in April

On Monday, the US Census Bureau reported that nonresidential construction spending increased 0.1% in April. On a seasonally adjusted annual rate basis, nonresidential spending totaled $1.250 trillion.

According to analysis from Associated Builders and Contractors (ABC), spending increased in 10 of the 16 nonresidential construction subcategories during the month. Private nonresidential spending declined 0.2%, while public nonresidential construction spending rose 0.4%.

Spending on data centers, which is included in the office category, increased 1.9% to a seasonally adjusted annual rate of $50.7 billion. Data-center spending was up 28.1% year-over-year.

Commenting on the report, ABC Chief Economist Anirban Basu said:

“Nonresidential construction spending inched higher in April, but that growth was entirely due to a sizable increase in public sector activity. Private nonresidential construction spending fell for the seventh consecutive month and is down nearly 8% from December 2023’s all-time high. While much of the segment’s recent weakness is attributable to the rapid decline in CHIPS Act-incentivized manufacturing megaprojects, private sector construction momentum has been difficult to find outside of the still-ascendant data center segment.

Those data center projects have buoyed the ABC Construction Backlog Indicator and kept ABC members confident about their outlooks, at least on the whole. While that particular tailwind will persist for some time, rising materials prices and a lack of momentum in many commercial segments may eventually weigh on contractor sentiment.”