July Starts Slump 9%

News & Events

July Starts Slump 9%

New construction starts in July fell 9% to a seasonally adjusted annual rate of $817.4 billion, according to Dodge Data & Analytics. “The pattern of construction starts on a monthly basis is often affected by the presence or absence of very large projects, and several exceptionally large projects boosted activity in June to an unsustainably high amount,” stated Robert A. Murray, chief economist for Dodge Data & Analytics. “These June projects included a $6.5 billion uranium processing plant in Tennessee and a $1.7 billion petrochemical plant in Texas, as well as the $1.8 billion Spiral office tower in New York NY and a $665 million office tower in Chicago IL. While July also featured the start of several large projects, such as a $2.4 billion petrochemical plant in Texas and a $750 million data center in Alabama, the lift from very large projects in July was less than what took place in June. Still, the pace of construction starts in July came in 2% above the average for the second quarter, which is consistent with the sense that overall construction starts continue to trend upward, notwithstanding July’s steep decline compared to June. The current year has seen the mounting headwinds of higher material prices and higher interest rates, but it’s also seen the tailwinds of healthy economic growth, some easing of bank lending standards, and the increased funding for public works programs coming from the federal appropriations legislation passed in March. Amidst the monthly ups-and-downs, the broad trend for construction starts during 2018 remains one of modest expansion.” The institutional building categories as a group dropped 10% in July, following a 13% increase in June. The healthcare facilities category pulled back 35% after its 110% June hike, although the latest month did include the start of a $188 million hospital in Los Angeles CA, a $100 million hospital in Easton PA, and a $100 million hospital in Quakertown PA. The amusement and recreational facility category dropped 25% in July, falling for the second month in a row. Educational facility construction retreated 12% after June’s 21% increase, even with the July start of several large high school projects such as a $128 million high school in Saugus MA and a $115 million high school in Roseville CA. Running counter to the broad decline for institutional building in July was a 28% increase for transportation terminals, led by two noteworthy airport terminal projects – the $650 million main terminal upgrade at Denver International Airport and the $268 million Concourse D project at Nashville International Airport. The public buildings category jumped 56% in July, reflecting groundbreaking for the $207 million Center for Law Enforcement and Public Health in Philadelphia PA, and church construction edged up 2% from a very weak June.