US data-center construction spending climbs 73% to an $85 billion annual rate
US data-center construction spending rose 73% in a year to an $85 billion annual rate, Census Bureau figures for August show. Factory construction still runs at nearly twice that rate, and builders are paying about a tenth more for materials and services than a year ago.
The Investor · Invest desk
What happened
- August alone added 7.5% to the data-center spending rate over July.
- Since the beginning of 2021, the annual rate of data-center construction spending has risen 823%.
- Power-sector construction rose 8.5% over the year to a $186 billion annual rate and is up 58% since the start of 2021.
Why it matters
- What it costs cost Adjusted for the 9.4% rise in construction-services prices, factory building is down about 27% in real terms, a steeper cut in volume than the dollar figures show.
- What it limits constraint Power plants need years of planning and permitting before construction starts, so generation spending cannot speed up on the schedule data-center shells are going up.
- Who's exposed exposure Data-center sites face municipal and state efforts to slow or block them, Texas included, now that power demand and electricity prices have entered midterm campaign rhetoric.
Next story · Invest · Sep 12
Producer input costs ran 6.1 points ahead of final demand prices in AugustConfirmed2 publishers
Added together, data-center and factory construction ran at about $253 billion a year in August, roughly $5.6 billion below their combined rate a year earlier [15]. The data-center line added about $36 billion over those twelve months, from roughly $49 billion [13]. Factories lost about $41 billion, from roughly $209 billion [14].
Two adjustments shrink the data-center gain without reversing it. The first is price. Deflated by the producer price index for nonresidential construction services, up 9.4% over the year [12], the 73% nominal increase [1] is about 58% in real terms [17]. Wolf Richter of Wolf Street, who reported the Census figures, dates a second wave of construction inflation to the start of 2025, and the materials index is up 15.8% since then [11].
The second is scope. The Census figure covers the building, the improvements around it and built-in equipment such as HVAC. It leaves out servers, racks, networking gear and the electrical equipment that powers them, often including on-site generators [4]. "But that's the cheap part of a data center," Richter wrote [5]. Factory figures also exclude production equipment such as robots and chipmaking systems [9], so the factory comparison is shell against shell. The power series counts generation equipment [10], so it does not compare cleanly with either.
I think the plainest reading is substitution: contractors and crews that a year ago were building factories are now building data centers, and factory projects are what they are not building. The counter-case is that the two lines have different owners with unrelated reasons to spend or stop, and the offset is a coincidence of timing. The connection in the source is labor. Richter reports shortages on other projects as specialists are pulled to data-center jobs [23], and wrote of those projects' "whatever-it-takes approach to spending" [24].
Data centers alone now run above the roughly $74 billion a year that factory construction averaged from 2015 through 2020 [19]. Richter, who describes the data-center curve as near-exponential for now [7], wrote that "nothing that needs to be funded can grow on an exponential curve for long" [26]. Compounded for twelve months, August's monthly gain would take the annual rate to about $202 billion [20].
What to watch
- The factory line in the next Census releases: if it steadies near $168 billion while data centers keep rising, the combined total grows and the substitution reading fails.
- Coming producer price readings for construction materials and nonresidential services, both running near 10% a year, for whether builders' cost inflation slows.
Information, not investment advice. This story is general information about companies and markets, drawn from cited reporting. It is not a recommendation to buy, sell or hold any security; check the cited sources before acting.
Clarity's read
What the record supports and how the coverage leans. The claims behind it follow.
Reality
- Evidence78
- Adoption72
- Hype gap+10
- Incentives20
- Confidence76
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Ranked by verification strength, evidence, and original report placement.
- [1]
Construction spending on data centers rose 73% year over year to a seasonally adjusted annual rate of $85 billion in August, according to Census Bureau construction data.
- [2]
Data-center construction spending rose 7.5% in August from July.
- [3]
Since the beginning of 2021, the annual rate of construction spending on data centers has risen 823%.
- [4]
The Census data-center amounts reflect only construction costs of the buildings, improvements around them and equipment integrated into them such as HVAC; they exclude servers, racks, electronic and optical networking equipment, and electrical equipment that supplies power, including in many cases onsite diesel or gas-turbine generators.
- [5]
But that's the cheap part of a data center.
- [6]
Spending on factory construction ran at an annual rate of $168 billion in August, unchanged from July and down 19.8% year over year.
- [7]
AI data-center construction is continuing along a near-exponential curve for now.
- [8]
Factory construction spending in August was still 126% higher than its average over 2015-2020.
- [9]
Factory construction figures exclude production equipment inside the factory, such as industrial robots and systems that produce semiconductors.
- [10]
Power plant construction spending includes the costs of power generation equipment.
- [11]
The Producer Price Index for construction materials rose 10.1% year over year in August and 15.8% since the beginning of 2025, when the second wave of inflation started.
- [12]
The PPI for nonresidential construction services rose 9.4% year over year and 11.8% since the beginning of 2025.
- [13]
Data-center construction ran at roughly $49 billion a year a year earlier, so it added about $36 billion to its annual rate.
- [14]
Factory construction ran at roughly $209 billion a year a year earlier, so it lost about $41 billion of annual rate.
- [15]
Combined data-center and factory construction ran at about $253 billion in August versus about $259 billion a year earlier, roughly $5.6 billion lower.
- [16]
Factory construction spending is about 1.98 times data-center construction spending.
- [17]
Deflated by the 9.4% rise in the nonresidential construction services PPI, the 73% data-center gain is about 58% in real terms.
- [18]
Deflated by the 9.4% rise in the nonresidential construction services PPI, factory construction is down about 27% in real terms over the year.
- [19]
Factory construction averaged roughly $74 billion a year over 2015-2020, below the current $85 billion data-center rate.
- [20]
If August's 7.5% monthly gain repeated for twelve months, the data-center annual rate would reach about $202 billion.
- [21]
Construction spending in the power sector rose 0.8% in August from July and 8.5% year over year to an annual rate of $186 billion, and is up 58% since the beginning of 2021.
- [22]
Planning and permitting of power plants and distribution infrastructure takes years before construction can start.
- [23]
There are reports of labor shortages on other projects as skilled specialists are pulled away by data-center projects, including through higher salaries.
- [24]
whatever-it-takes approach to spending
- [25]
People, municipalities and state governments, including in Texas, are making efforts to slow or block data centers; data centers, their power demand and their effect on electricity prices have entered midterm election rhetoric.
- [26]
nothing that needs to be funded can grow on an exponential curve for long
Sources
2 independent publishers whose own reporting we read for this story.
Topics and entities
Topics
- AI Infrastructure
- Factory construction
- Data Center Construction
- US construction spending
- Construction Cost Inflation