> ## Content Index > Fetch the complete content index at: https://www.industrialbriefs.com/llms.txt > Use this file to discover other available public pages before exploring further. # Rising Costs and Data Center Boom Shape Construction's Uneven Growth - URL: https://www.industrialbriefs.com/construction-growth-rising-costs-data-centers/ - Published: 2026-11-11T04:01:05.000Z - Updated: 2026-11-11T04:01:05.000Z - Description: Rising construction costs and a focus on data centers drive mixed industry confidence, impacting profit margins and sales expectations. - Author: IndustrialBriefs - Tags: construction ![IB_KEY_FACTS:[{"stat":"8.7 months","label":"Average contractor backlog increased in September.","sublabel":"Second consecutive month of growth reported by ABC."},{"stat":"11.2%","label":"Construction input prices surged year-over-year.","sublabel":"Largest annual increase in nearly four years."},{"stat":"8.6%","label":"Data center construction spending rose in September.","sublabel":"Significant growth driven by AI and cloud computing demands."}]](https://industrial-briefs.ghost.io/favicon.ico) More work on contractors’ books is offering little assurance of stronger returns in the future. Backlog increased for a second consecutive month in September to 8.7 months, according to Associated Builders and Contractors. Yet, more than a quarter of contractors expected their profit margins to shrink over the next six months, the highest share since November 2025\. Sales expectations also dropped to an 11-month low. The pessimism stems from rising construction costs, coupled with much of the momentum being concentrated in the artificial intelligence buildout. Construction input prices, for example, jumped 11.2% from a year earlier in September, the largest annual increase in nearly four years, according to ABC. Contractors during that span absorbed much of that cost escalation, according to Associated General Contractors of America. But on a positive note, signs of activity popped up over the past month in other types of construction too. Education and healthcare projects pushed nonresidential planning higher in September, according to Dodge Construction Network. Institutional groundbreakings as a whole improved in September as well, according to Dodge. Nevertheless, data center projects still account for a majority of construction momentum, especially around spending. Construction spending on the data center boom surged 8.6% in September, according to ABC’s analysis of Census Bureau data. Without the data center and closely related power category boost, nonresidential spending fell. ABC members with data center contractors reported 11.3 months of backlog, three months more than firms without those projects. Just 15% of ABC members had such work under contract. **What Happened** The construction industry is experiencing a paradoxical situation: an increase in workload but a decline in confidence among contractors. The Associated Builders and Contractors (ABC) reported that the average backlog rose to 8.7 months in September, marking the second consecutive month of growth. Despite this, contractors are not optimistic. Over 25% of them anticipate shrinking profit margins in the next six months, the highest rate since November 2025\. Sales expectations have also dropped to an 11-month low. This cautious outlook is largely due to escalating construction costs, which rose by 11.2% year-over-year in September, the largest increase in nearly four years. The cost surge is attributed to higher fuel prices and tariffs affecting key materials. While the data center boom contributes heavily to the current construction momentum, with spending in this area increasing by 8.6% in September, the broader nonresidential sector shows mixed signals. Outside the data center focus, education and healthcare projects have slightly uplifted nonresidential planning, as reported by Dodge Construction Network. Yet, without the data center upswing, nonresidential spending would have declined. **What This Means for Your Business** For contractors and stakeholders in the AECM industry, the current economic climate necessitates strategic adjustments. The data center boom presents lucrative opportunities, evidenced by ABC members with data center projects having a backlog of 11.3 months, significantly higher than those without. However, with only 15% of ABC members involved in data center contracts, diversification into other sectors such as healthcare and education could mitigate risks associated with market volatility and concentration. Rising construction costs further pressurize profit margins, urging businesses to adopt cost-effective measures, possibly leveraging technology and efficient procurement strategies. Compliance with evolving standards, such as the Cybersecurity Maturity Model Certification (CMMC) for government contracts, remains imperative, particularly for companies involved in data center projects. As construction costs and tariffs fluctuate, maintaining a robust supply chain and exploring federal funding opportunities, especially those supporting sustainable and resilient infrastructure, can enhance competitive positioning and ROI. **What US Operators Should Watch** US operators should closely monitor federal deadlines and procurement windows, particularly those related to data center and institutional projects. The ongoing data center expansion, driven by AI and cloud computing demands, presents a window for strategic bids and partnerships. Additionally, staying abreast of regulatory changes, such as those affecting tariffs and material costs, will be crucial for maintaining compliance and optimizing operational costs. Upcoming CMMC audit dates should also be on the radar for contractors involved in government projects to ensure readiness and compliance. --- *Source: https://www.constructiondive.com/news/construction-latest-economic-reports-reveal-less-confidence-more-work/873815/.* [*Read the original story ->*](https://www.constructiondive.com/news/construction-latest-economic-reports-reveal-less-confidence-more-work/873815/?ref=industrialbriefs.com)