What We Learned in August: Construction Industry Lacks Broad-Based Momentum
The construction industry posted another month of lackluster growth. While nonresidential spending increased modestly and contractors continued to add jobs, momentum is highly concentrated in the data center category.
Nonresidential Construction Lacks Momentum Beyond Data Centers
Nonresidential construction spending inched higher in June but is still down more than 2% on a year-over-year basis. Momentum remains highly concentrated in the data center segment, and the private side of the segment is particularly weak. Excluding data centers, private nonresidential spending is down nearly 8.0% over the past year. While the power category, which has benefited from the boom in data center construction, remains strong, most nonresidential segments are struggling in the face of high borrowing and material costs.
Contractors Continue to Hire
Construction industry employment continues to grow at a healthy pace, adding another 22,000 jobs in July. 20,000 of those jobs were in the nonresidential segment, and demand for nonresidential specialty trade contractors remains particularly strong due to the ongoing demand for data center construction.
Backlog Plummets in July, Contractors Remain Relatively Upbeat
ABC’s Construction Backlog Indicator fell to 8.0 months in July, down 0.8 months on both a monthly and yearly basis. The decline was widespread, with every industry, company size, and region experiencing a monthly decline in backlog. The South remains the only region with longer backlog than one year ago.
Despite this decline, contractors remained relatively upbeat, according to ABC’s Construction Confidence Index, with sales, profit margin, and staffing expectations all positive on net for the month.
Materials Prices Tame in July, Escalation Will Persist
Construction input prices rose only modestly in July, suppressed by the dip in fuel prices that occurred during the first half of the month. Given the subsequent rebound in oil prices and ongoing escalation in the price of inputs like iron, steel, and copper, materials prices will likely continue to climb over the next several months.
Looking Ahead
Borrowing costs and materials prices remain a major headwind for the construction industry. While the insatiable demand for data centers will keep some contractors busy, opportunities may be increasingly scarce in other segments. Notably, the 12% of ABC contractors with data center work have an average backlog of 11.4 months compared with 7.5 months for contractors without data center work.
| August 2026 Economic Overview | Values | Change from | |||
| Construction Backlog Indicator (Months)* | Jul-26 | Jun-26 | Jul-25 | Jun-26 | Jul-25 |
| Nationwide | 8.0 | 8.8 | 8.8 | -0.8 | -0.8 |
| Middle states | 7.1 | 8.5 | 8.0 | -1.4 | -0.9 |
| Northeast | 7.3 | 8.0 | 8.1 | -0.7 | -0.8 |
| South | 10.1 | 10.3 | 9.8 | -0.2 | 0.3 |
| West | 6.9 | 7.6 | 8.7 | -0.7 | -1.8 |
| Construction Confidence Index** | Jul-26 | Jun-26 | Jul-25 | Jun-26 | Jul-25 |
| Sales | 61.2 | 63.6 | 60.4 | -2.4 | 0.8 |
| Profit margins | 52.7 | 52.4 | 51.8 | 0.3 | 0.9 |
| Staffing | 62.3 | 62.7 | 62.4 | -0.4 | -0.1 |
| Spending ($Millions) | Jun-26 | May-26 | Jun-25 | May-26 | Jun-25 |
| Total construction | $2,166,539 | $2,168,496 | $2,237,719 | -0.1% | -3.2% |
| Residential | $889,365 | $892,448 | $933,267 | -0.3% | -4.7% |
| Nonresidential | $1,277,174 | $1,276,048 | $1,304,452 | 0.1% | -2.1% |
| Amusement and recreation | $49,111 | $48,803 | $47,714 | 0.6% | 2.9% |
| Commercial | $121,245 | $122,774 | $128,841 | -1.2% | -5.9% |
| Communication | $29,420 | $29,263 | $28,764 | 0.5% | 2.3% |
| Conservation and development | $16,593 | $16,015 | $12,591 | 3.6% | 31.8% |
| Educational | $137,656 | $138,055 | $138,555 | -0.3% | -0.6% |
| Health care | $74,811 | $74,649 | $75,954 | 0.2% | -1.5% |
| Highway and street | $152,065 | $152,283 | $147,730 | -0.1% | 2.9% |
| Lodging | $24,524 | $24,405 | $26,968 | 0.5% | -9.1% |
| Manufacturing | $172,674 | $174,697 | $219,564 | -1.2% | -21.4% |
| Office | $132,750 | $129,312 | $118,009 | 2.7% | 12.5% |
| Power | $177,635 | $176,512 | $171,601 | 0.6% | 3.5% |
| Public safety | $21,187 | $21,569 | $22,831 | -1.8% | -7.2% |
| Religious | $6,483 | $6,480 | $5,056 | 0.0% | 28.2% |
| Sewage and waste disposal | $52,871 | $53,457 | $53,969 | -1.1% | -2.0% |
| Transportation | $72,461 | $71,969 | $70,918 | 0.7% | 2.2% |
| Water supply | $35,689 | $35,806 | $35,388 | -0.3% | 0.9% |
| Private nonresidential | $745,339 | $744,638 | $782,127 | 0.1% | -4.7% |
| Public nonresidential | $531,835 | $531,410 | $522,325 | 0.1% | 1.8% |
| Employment (Thousands) | Jul-26 | Jun-26 | Jul-25 | Jun-26 | Jul-25 |
| All industries | 158,858 | 158,881 | 158,542 | 0.0% | 0.2% |
| Construction | 8,343 | 8,321 | 8,261 | 0.3% | 1.0% |
| Residential building | 915 | 915 | 928 | -0.1% | -1.5% |
| Nonresidential building | 953 | 949 | 926 | 0.4% | 3.0% |
| Heavy and civil engineering construction | 1,204 | 1,203 | 1,183 | 0.0% | 1.8% |
| Residential specialty trade contractors | 2,349 | 2,346 | 2,380 | 0.1% | -1.3% |
| Nonresidential specialty trade contractors | 2,922 | 2,907 | 2,845 | 0.5% | 2.7% |
| Construction unemployment rate | 3.7% | 4.7% | 3.4% | -1.0pp | 0.3pp |
| Average hourly construction earnings | 41.5 | 41.4 | 39.7 | 0.2% | 4.4% |
| Average weekly construction hours | 39.5 | 39.3 | 39.0 | 0.5% | 1.3% |
| Job Openings and Labor Turnover Survey (Construction) | Jun-26 | May-26 | Jun-25 | May-26 | Jun-25 |
| Job openings | 305,000 | 291,000 | 224,000 | 14,000 | 81,000 |
| Hires | 323,000 | 282,000 | 350,000 | 41,000 | -27,000 |
| Total separations | 319,000 | 296,000 | 357,000 | 23,000 | -38,000 |
| Layoffs and discharges | 167,000 | 169,000 | 188,000 | -2,000 | -21,000 |
| Quits | 143,000 | 120,000 | 149,000 | 23,000 | -6,000 |
| Other separations | 10,000 | 7,000 | 19,000 | 3,000 | -9,000 |
| Producer Price Index: Inputs to | Jul-26 | Jun-26 | Jul-25 | Jun-26 | Jul-25 |
| Construction | 352.1 | 351.9 | 327.8 | 0.1% | 7.4% |
| Multifamily | 166.4 | 166.2 | 156.6 | 0.1% | 6.2% |
| Nonresidential | 177.8 | 177.6 | 165.9 | 0.1% | 7.2% |
| Commercial | 167.3 | 167.0 | 157.3 | 0.2% | 6.3% |
| Healthcare | 166.6 | 166.2 | 156.6 | 0.3% | 6.4% |
| Industrial | 175.4 | 175.5 | 164.0 | -0.1% | 6.9% |
| Other nonresidential | 176.3 | 176.2 | 164.0 | 0.0% | 7.5% |
| Maintenance and repair | 359.3 | 359.0 | 333.5 | 0.1% | 7.7% |
Sources: U.S. Bureau of Economic Analysis; U.S. Census Bureau; U.S. Bureau of Labor Statistics, Associated Builders and Contractors.
*The Construction Backlog Indicator measures the average months of work under contract for ABC members.
**The Construction Confidence Index is a diffusion index where values above 50 indicate expectations of expansion over the next six months, while values under 50 indicate expectations of contraction.
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