July Construction Starts Jump 25.6% as Megaprojects Drive Volatility
Total construction starts jumped 25.6% month over month in July to a seasonally adjusted annual rate of $1.79 trillion, Construction Dive reports, citing new data from Dodge Construction Network. The rebound followed a 19.9% drop in June tied to a lull in megaproject groundbreakings.
Market Impact
Eric Gaus, chief economist at Dodge Construction Network, said the swing reflects a fractured market rather than broad-based growth. “Megaproject driven volatility headlines a disjointed construction market,” Gaus said in the release. “There is strength in pockets, multifamily within residential, data centers within commercial, energy within nonbuilding.”
The numbers back that up. Nonresidential starts rose 57.7% month over month in July, driven largely by data center construction, which skyrocketed 107.9%, and manufacturing, which jumped 277.8%. But healthcare starts fell 59.7% and hotel groundbreakings dropped 51.5% over the same period. In the nonbuilding category, utility construction starts climbed 44.7% month over month, offsetting a 16.9% decline in highway and bridge starts and a 7.8% drop in environmental public works. Residential starts edged up 4.9%, with single-family up 4.3% and multifamily up 5.7%, though residential starts remain down 1.7% year to date.
The largest projects breaking ground in July included the $12.8 billion data center portion of Project Jupiter in Santa Teresa, New Mexico, the $12 billion Micron semiconductor fab in Clay, New York, and the $4 billion Amazon STACK data center in Benton, Louisiana. Also on the list: a $1.5 billion Transco pipeline expansion in Chatham, Georgia, and a $2.4 billion California High-Speed Rail package in Bakersfield.
What It Means for Subcontractors
- Electrical, mechanical, and E&I subcontractors tied to data center work should expect large, lumpy bid packages rather than steady flow, given data center starts alone jumped 107.9% in a single month.
- Firms serving healthcare and hospitality construction should brace for a slow stretch: healthcare starts fell 59.7% and hotel starts fell 51.5% month over month in July, signaling fewer near-term bid opportunities in those segments.
- Utility and pipeline contractors, including civil and pipefitting crews, have a strong pipeline to watch: utility construction starts rose 44.7% in July and electric power/utility starts are up 94.1% year to date, with active megaprojects like the $1.5 billion Transco Southeast pipeline expansion in Chatham, Georgia, and the $2.3 billion microgrid portion of Project Jupiter already breaking ground.
- Highway, bridge, and civil crews tied to public works should note nonbuilding infrastructure segments are softening month over month (highway and bridge down 16.9%, environmental public works down 7.8%), even as the category’s year-to-date total remains up 29.8%.
- Given the volatility Dodge describes, subcontractors should build bid capacity around a handful of named megaprojects, such as the $12.8 billion Project Jupiter data center in New Mexico and the $12 billion Micron fab in Clay, New York, rather than assuming a smooth, evenly spaced pipeline of work through year-end.
