Read the May economic data quickly and construction looks healthy. Planning up. Starts up. Backlog at a three-year high. Job openings at a 10-month peak.
Read it carefully and you find one sector holding the whole thing up.
What the aggregate numbers hide
Private nonresidential construction spending fell in May for the seventh consecutive month, according to Census Bureau data. Seven months is not noise. Warehouse and office have been the worst of it, and both are still bleeding.
What offsets that in the headline number is artificial intelligence. Dodge Construction Network logged month-over-month gains in both planning and groundbreakings, driven by megaprojects. ABC reported that contractors added to backlog, hitting the highest level since 2023 — while contractor confidence went the other way. Anirban Basu, ABC’s chief economist, has been explicit that contractors with data center awards report stronger pipelines than those without.
The 10-month high in job openings tells the same story. Basu attributed it to “exceptional demand” for roles critical to data center construction. Not construction. Data center construction.
Costs are moving the wrong way
The other number worth sitting with: construction input prices rose at their fastest annual pace since the pandemic in May, per an Associated General Contractors analysis. Ken Simonson, AGC’s chief economist, called it a “double whammy” — materials climbing while bid price growth slows.
That’s a margin story. When your inputs inflate faster than you can push price, backlog stops being an asset and starts being a liability. A contractor sitting on nine months of work priced in late 2025 is watching that work get less profitable every month.
The exposure question
Healthcare and infrastructure have propped up some of the non-AI activity, and both have real runway. MD Anderson just got a $2.9 billion clinical tower approved. IIJA money is still flowing.
But if you’re a contractor without a hyperscaler client, the last seven months of data describe your market, and the aggregate figures do not. The honest question for anyone reading a rosy headline this summer is simple: what share of your 2027 backlog depends on a single buyer category that is currently spending like the constraint is grid capacity rather than demand? The June planning slip was small. It was also the first one.