U.S. nonresidential construction spending dropped 0.2% in August, its third decline in four months, and was 1.5% lower than the previous year, with data centers remaining the key bright spot, according to Associated Builders and Contractors' (ABC) analysis of data published by the U.S. Census Bureau.

Spending was down on a monthly basis in 10 of the 16 nonresidential subcategories. Private nonresidential spending was down 0.3%, while public nonresidential construction spending was down 0.1% in August.

“Nonresidential construction spending contracted for the third time in the past four months in August and is now down 1.5% year over year,” said ABC Chief Economist Anirban Basu. “The manufacturing and commercial categories have been particularly weak in 2025, while momentum remains confined almost exclusively to the data center segment. This should come as no surprise given that approximately 1 in 7 ABC members are under contract to work on a data center, and those contractors have significantly higher backlog than those that are not, according to ABC’s Construction Backlog Indicator survey.

Basu warned that the August data doesn't capture two major problems that hit after that month: the government shutdown's impact on public projects and new tariffs driving up material costs.

“With private nonresidential activity buckling under the weight of high borrowing costs, extraordinarily elevated uncertainty and rising materials costs, a slowdown in public sector work could lead to a particularly difficult few quarters for the industry," he added.