Major takeaways for July
Nonresidential starts down 1 percent
Commercial starts down 19 percent
Institutional starts up 11 percent
Total construction starts fell 3 percent in July to a seasonally adjusted annual rate of $854.8 billion, according to Dodge Data & Analytics. There were few bright spots during the month, with all three sectors―residential, nonresidential building and nonbuildings―moving lower in July.
“Construction material prices continue their march higher and are weighing heavily on construction starts,” says Richard Branch, chief economist for Dodge Data & Analytics. “Lumber and copper prices have fallen in recent weeks; however, steel, plastic and other construction-related products are continuing their ascent. These increases will continue to impact construction starts over the coming months, somewhat muting the impact of stronger economic activity.
A further risk to the sector is the rising number of COVID-19 cases due to the Delta variant. While we don’t expect significant business restrictions in response, it is a risk that cannot be fully discounted. On the upside, projects entering the planning stage remain at levels not seen in several years and forward progress on an infrastructure program and the federal budget provides hope that brighter days are ahead.”
Nonresidential
Nonresidential building starts fell 1 percent in July to a seasonally adjusted annual rate of $283.8 billion. Commercial starts lost 19 percent during the month as starts pulled back in the warehouse, office and retail sectors, while hotel starts rose. Institutional starts rose 11 percent during the month due to gains in health care, recreation and transportation, while education starts fell. Manufacturing starts posted a solid gain in the month, nearly doubling from June’s level. Through the first seven months of 2021 nonresidential building starts were 4 percent higher when compared to the first seven months of 2020. Commercial starts were up 5 percent and manufacturing starts rose 45 percent, while institutional starts were 1 percent lower.
For the 12 months ending July 2021, nonresidential building starts were 8 percent lower than the 12 months ending July 2020. Commercial starts were down 8 percent, while institutional starts fell 5 percent. Manufacturing starts dropped 26 percent in the 12 months ending July 2021.
The largest nonresidential building projects to break ground in July were the $1.5 billion JP Morgan Office Tower in New York, the $1 billion Inglewood basketball arena in Los Angeles, and the $825 million REG Geismar Biofuels Plant in Geismar, Louisiana.
