According to Dodge Construction Network, total construction starts rose 48 percent in July to a seasonally adjusted annual rate of $1.36 trillion. This gain is the result of the start of three large manufacturing plants and two LNG export facilities. Even without these projects, total construction starts would have still increased 7 percent.
The breakdown
Nonresidential building starts rose 79 percent in July, and nonbuilding starts jumped 120 percent, whereas residential starts decreased 8 percent.
Year-to-date, total construction was 11 percent higher in the first seven months of this year compared to the same period of 2021. Nonresidential building starts rose 22 percent over the year, residential starts were 1 percent higher, and nonbuilding starts were up 16 percent.
For the 12 months ending July 2022, total construction starts were 10 percent above the 12 months ending July 2021. Nonresidential starts were 21 percent higher, residential starts gained 4 percent, and nonbuilding starts were up 10 percent.
What does this mean?
“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.”
