- Total construction starts declined 9% in August to a seasonally adjusted rate of $1.25 trillion, according to a Dodge Data & Analytics report.
- The drop in starts follows a 48% spike in July that included the start of three large manufacturing plants and two LNG export facilities, according to the report.
- Despite the decrease in starts, the industry remains in a “very good position” to continue modest growth, but higher interest rate hikes may undo this support in the coming months, said Richard Branch, chief economist for Dodge, in the release.
Nonbuilding construction starts fell 36% in August to a seasonally adjusted annual rate of $278.8 billion. But if the two multi-million dollar LNG projects were excluded from July’s figures, August’s nonbuilding starts would have increased 27%, according to the report.
That shows strength outside of the high valuation projects, said Branch.
“While construction starts activity continues to be dominated by mega-projects like chip fabrication plants, the middle and lower end of the value spectrum is holding up well,” said Branch. “This is a sign that organic growth in the construction sector has not yet been undermined by the concern of a potential recession in 2023.”
The largest nonbuilding starts to break ground in August were the $1.9 billion third phase of the New Soo Lock Chamber in Sault Ste Marie, Michigan, a $738 million paving project in Honolulu, Hawaii and the $460 million first phase of the Sand Island wastewater treatment plant in Honolulu, Hawaii.
Nonresidential building starts jumped 7% in August to a seasonally adjusted annual rate of $569.6 billion, according to the report. Commercial starts surged 22% in August, with all categories posting an increase. Year to date, nonresidential building starts were up 35% compared to the same period in 2021.
The largest nonresidential projects to break ground in August include the $9.5 billion New Terminal One at JFK Airport in Queens, New York City; the $8.5 billion Samsung chip plant in Taylor, Texas and the $1.1 billion Gaylord Pacific Hotel and Convention Center in Chula Vista, California.
Total construction starts increased in August in the Northeast, South Atlantic and West, but dropped in the Midwest and South Central regions.