US Focus: When will nonres. construction stabilize?

Research evidence excerpt

US Focus: When will nonres. construction stabilize?

Abiel Reinhart (1-617) 712 9122 North America Economic Research J P M O R G A Nabiel.reinhart@jpmchase.com

JPMorgan Chase Bank NA 31 July 2026

US Focus: When will nonres. Act level within the next year, at which point this drag will

abate, though it could be more drawn out if a slower decline

construction stabilize? observed in 2Q persists. It’s also worth pointing out that this

decline is not a sign of weakness, but rather the natural coun-

Nonresidential construction fell 5.0%q/q saar in 2Q, the tenth terpoint to the huge surge in construction that began in 2021.

straight quarterly decline (Figure 1). That nonresidential And as construction finishes up, output can rotate from put-

structures spending is continuously falling is perhaps surpris- ting up buildings to making semiconductors.

ing when data center construction is soaring. Moreover, we

expect a continued decline in the near-term, as spending relat- Even after computer manufacturing construction stabilizes,

ed to the CHIPS Act continues to drop. By next year, though, this won’t necessarily translate into quick growth in overall

we should get some tepid growth again, and we look for non- nonresidential investment. Nonresidential structures invest-

residential investment to rise 2% in 2027. ment excluding manufacturing has recently been close to flat,

falling 0.9%oya in 2Q, though that’s a much smaller rate of

Figure 1: Real nonresidential structures investment decline than persisted through early last year (Figure 1).

$2017bn, both scales Spending is still falling because while data centers are grow-

Excluding manufacturing 750 600 ing — up 18%oya — they account for less than 6% of total

Total

nonresidential construction. Spending on commercial and