Strip Out Data Centers and Nonresidential Building Is at a 2023 Low

Total construction spending in the United States ran at a seasonally adjusted annual rate of $2,157.6 billion in July, down 0.5 percent from June and 3.8 percent below July 2025, the Census Bureau reported September 1. Private nonresidential construction went the other way, rising 0.4 percent for the month to a $755.2 billion annual rate. A single category accounts for the divergence.

That category is data centers. Census figures put data center construction above a $75 billion annual rate in July, up close to 60 percent from a year earlier. Associated Builders and Contractors chief economist Anirban Basu put it plainly: the increase in nonresidential construction spending that occurred in July was entirely due to data centers. Strip that category out, he said, and nonresidential spending fell for a second consecutive month and sits at its lowest level since September 2023.

The composition underneath that headline has flipped in about eighteen months. Manufacturing construction, the fab and battery-plant wave that defined nonresidential work coming out of 2023, ran at a $167.8 billion annual rate in July, down 21.7 percent year over year. Commercial construction, which covers retail, warehouse and distribution, ran $116.2 billion, down 4.7 percent. Office construction, the Census line item that contains data centers, ran $123.3 billion and was up 21.3 percent. Power construction ran $161.5 billion, up 6.5 percent.

Two of those four categories are still growing, and they are the two that consume the most electrical labor per dollar. A distribution center is mostly shell and slab with a modest electrical package relative to its square footage. A hyperscale data hall is the opposite: the building exists to house electrical and mechanical infrastructure, and the switchgear, busway, medium-voltage distribution, generator paralleling and commissioning scope is the project. Substation and transmission work carries a similar ratio.

The forward pipeline points the same direction. ConstructConnect is tracking 85 data center projects worth $78.7 billion scheduled to break ground before the end of 2026, with 71 percent of that value in the South, 20.2 percent in the Midwest and 8.7 percent in the West. The average tracked data center project this year runs about $1.06 billion and 701,000 square feet, against $352.8 million and 454,400 square feet in 2025. Fewer sites, far larger, and concentrated in a handful of states.

That geography matters more than the national totals. Manufacturing construction is spread across dozens of metros; the data center pipeline is not. An electrician in a market that spent 2024 and 2025 wiring a chip fab or a cell plant is looking at a category down more than a fifth, in a region that may not appear anywhere in the data center pipeline. The national market did not shrink so much as it moved, and moving with it means travel for a meaningful share of the workforce.

Hiring data confirms the sorting is already happening. The Bureau of Labor Statistics reported September 4 that construction added 22,000 jobs in August, with employment among nonresidential specialty trade contractors up 8,000, ahead of the 6,000 average monthly gain over the prior twelve months. Nonresidential building contractors, the general contractor side, lost jobs in the same month. Specialty trades, the category that includes electrical contractors, are absorbing the growth while the builders above them contract.

For a working commercial electrician the practical reading is about backlog quality rather than backlog size. A contractor whose book is weighted toward manufacturing and general commercial is looking at two categories that are both declining year over year. A contractor with data center and utility scope is looking at the only two categories adding dollars. Those are very different employers to be dispatched to in the fourth quarter, and the difference does not show up in a company's headcount until the current jobs top out.

There is a real concentration risk in that, and it cuts both ways. Construction is roughly a fifth of what a data center actually costs to build; the rest is equipment and processors, which means the construction line can move on decisions made about chip supply and financing rather than about buildings. A category carrying the entire nonresidential gain is also a category whose slowdown would be felt immediately. The power number is the steadier of the two: utility capital plans run on multi-year regulatory approvals and are less exposed to a change in one operator's spending posture.

The July report is one month of data, and Census revises. But the direction has held for most of a year, and it has now separated far enough that the national construction number and the commercial electrical market are telling different stories. Total spending is down 3.8 percent. Electrical scope is not.

The market for commercial electricians did not contract this summer. It relocated, and it got denser.