Groundbreakings on public infrastructure projects jumped in July and are expected to accelerate later this year if the Federal Reserve begins to trim interest rates.
That’s the
Its latest report highlighted a 19% increase in July from June for so-called nonbuilding groundbreakings. That includes highway and bridge starts, which rose 11% in July from a month earlier. Environmental public works projects gained 8%.
The report does not break out publicly funded projects. But an Aug. 16
Through the first 10 months of fiscal 2024, outlays from the federal Highway Account of the Trust Fund rose 20% over where they were as of the ten-month mark of fiscal year 2021, before the Infrastructure Investments and Jobs Act became law, according to Eno.
Mass Transit Account outlays are up 49% over fiscal 2021, Eno said. The numbers are expected to move “significantly higher” in the next three months, Eno said, as highway outlays are the highest in August, September, and October during the warm construction season.
Dodge chief economist Richard Branch said much of the volatility among construction groundbreaking in the last years has been due to high interest rates.
On Friday, Federal Reserve Board Chair Jerome Powell indicated the Fed is set to cut rates in September. Branch expects that to kick off a round of 25 basis point quarterly cuts into next year.
“Once those rate cuts start to become much more consistent, so too will the flows and the trends within the construction start space,” Branch said in a video accompanying the Dodge report.
For the 12 months ending July 2024, total nonbuilding starts ticked 5% higher over the previous 12 months, Dodge said. A “sharp increase” in healthcare projects drove an 18% increase in July over June, Dodge said.
The largest nonbuilding projects to break ground in July were the $1.5 billion Revolution Wind offshore wind farm off the coast of Rhode Island, the $819 million Potomac River Tunnel in Washington, DC, and the $800 million Ryan Field Stadium at Northwestern University in Evanston, Illinois.
Dodge also measures planning activity and