Analysis
August 28, 2026
Steel Summit: Data centers support steel demand as project pipeline lengthens
Written by Laura Miller
Data center construction is supporting US nonresidential construction activity and steel demand, according to Eric Gaus, chief economist at Dodge Construction Network.
“Data center projects use a lot of steel,” Gaus said at the SMU Steel Summit 2026 in Atlanta on Aug. 26. He mentioned structural steel and electrical tubing specifically.
The Dodge Momentum Index shows that data centers have driven much of the recent increase in commercial project activity. He said excluding data centers, commercial momentum has been mostly flat.
Data center activity is concentrated in Texas and Virginia, among other states, and is increasingly moving toward large and mega-scale projects. But rising costs, grid capacity reviews, and local pushback could slow the pace of development. Gaus said data center growth could fall to single digits by 2028.
Manufacturing starts are forecast at about $50 billion to $60 billion this year, below more than $100 billion in 2022 but still above pre-pandemic levels. Activity remains concentrated in batteries, semiconductors, electrical machinery, and related chemical production, supported by CHIPS Act and Inflation Reduction Act spending.
Gaus said construction is reflecting a K-shaped economy, with spending concentrated in higher-end segments such as luxury hotels and luxury retail. Institutional projects, including education, corrections, and hospitals, are also holding up relatively well.
Power plant starts are expected to reach record inflation-adjusted levels in 2025 and 2026. However, regulatory processes and long development timelines could limit the pace of new generating capacity.
Project timelines are lengthening across the construction market. “That pipeline is going very, very slowly,” Gaus said, adding that some projects are moving through the pipeline 50% to 100% more slowly than before the pandemic.
