Data center construction spending surged another 6% in July and now accounts for an even 10% of all private nonresidential construction activity.
[The graph’s title, “Data Center Construction to the Moon,” could become a real thing. There are at least semi-serious efforts to put data centers in space/on the moon.]
The segment has grown at an unfathomable 116% annual rate since March. If that pace continues, it will expand to $162.6 billion by this time next summer, making it 29% larger than computer/electrical manufacturing construction was at its peak in June 2024.
This boom is absorbing a lot of the capital that would typically flow to other construction segments. Over the past year, data center spending has risen by 57% (+$27.3 billion), while all other nonresidential construction spending is down 3.5% (-$43.7b).
This dynamic has benefited a narrow subset of—mostly large—contractors. Our latest ABC CBI data shows that the 12% of contractors with data center work have way longer backlog (11.4 months) than the 88% who aren’t (7.5 months).
What’s Next
Next week, we’re going to look into some of the broader dynamics around data centers (like increasingly intense community opposition). We also have a Q&A post in the works, and Friday’s BLS jobs report gets its own write up.
Then it’s Week in Review, our every-Friday post that covers everything you need to know about the economy in a breezy, 5-minute read.
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The moon is a good place for them. But honestly, are these data centers going to be technologically obsolete within years of completion?