Construction Starts Surge in July Thanks to Mega Projects

Total construction starts surged 48% in July to a seasonally adjusted annual rate of $1.36 trillion thanks to the start of three large manufacturing plants and two LNG export facilities, the Dodge Construction Network reports.

Even without the five major construction starts, the Dodge Construction Network says that construction starts would still have increased by 7%. Overall, nonresidential building starts rose 79% in July while residential building starts decreased by 8%.

“Mega-projects aside, construction continues to improve despite the pressure created by higher interest rates and labor scarcity,” says Richard Branch, chief economist for Dodge Construction Network. “Combined with the strong labor market, this is another indicator that the U.S. is not currently in a recession. However, the Federal Reserve will continue to aggressively raise interest rates until they feel that inflation is under control. This will create mounting pressure on building activity and potentially lead to a slowdown in construction starts by year-end.”

Year-to-date, total construction was 11% higher in the first seven months of 2022 compared to the same period of 2021. Nonresidential building starts rose 22% over the year, residential starts were 1% higher and nonbuilding starts were up 16%.

Nonresidential building starts rose 79% in July to a seasonally adjusted annual rate of $530.5 billion. This is due to four projects that broke ground that together total $17.9 billion. Even without these projects, nonresidential building starts would have increased by 16%. Additionally, institutional starts rose 28% during the month due to a solid gain for healthcare starts, while commercial starts lost 11%.

The largest nonresidential building projects to break ground in July were the $10 billion Intel Semiconductor plant in Jersey Township, Ohio, the $2.9 billion BlueOval SK Battery Park Ford plant in Glendale, Ky., and the $2.8 billion BlueOval City manufacturing campus in Stanton, Tenn.

Residential building starts fell 8% in July to a seasonally adjusted annual rate of $391.9 billion. Single-family starts lost 9% and multifamily starts shrunk by 5%. However, residential starts were 1% higher than that of the same timeframe in 2021.

The largest multifamily structures to break ground in July were the $680 million first phase of the OneJournal Square building in Jersey City, N.J., the $380 million 90Ninety mixed-use building in Jamaica, N.Y., and the $325 million Domino Sugar Factory redevelopment in Brooklyn, N.Y.

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