California Construction Sector Newsletter | JM Construction
Mark Marshall — President, JM Construction
Edition No. 29 | Thursday, July 9, 2026
Coverage window: July 2 – July 9, 2026
Highlights from the Past 7 Days
A quieter data week, with one meaningful release: the nonresidential planning pipeline pulled back in June for the first time in several months. The more consequential development was in the bond market, where last week’s soft jobs report shifted what traders expect the Fed to do next — and it isn’t what most contractors assume.
Construction Starts and the Planning Pipeline
Dodge Momentum Index (June, released July 8): The DMI fell 1.9% in June to 271.7, down from an upwardly revised May reading of 277.1. Commercial planning declined 6.8% while institutional planning momentum grew 10.9%. Dodge’s Sarah Martin said that despite June’s pullback, nonresidential planning remains on solid ground — data center activity continued to drive the Index but moderated from the extraordinary pace of recent months, while planning accelerated across nearly every other sector. Within the commercial portion, planning for traditional office buildings, warehouses, retail stores and hotels improved. Dodge Construction Network
Read it this way: the DMI leads actual nonresidential building starts by roughly a year, so a June reading of 271.7 still points to workable volume in mid-2027. The composition is what changed — the pullback is a data-center effect, and institutional work (healthcare, education, public buildings) is the segment strengthening underneath it. For a firm without data-center exposure, June’s “decline” is arguably better news than May’s increase was.
Financing Conditions — The Item to Actually Watch
The Federal Reserve has held its target range at 3.50%–3.75%, and the 10-year Treasury is sitting near 4.55%. After last week’s weak payroll print, stock futures rose and traders eased expectations for an interest rate increase as soon as September, with the policy-sensitive 2-year yield falling 3.5 basis points to 4.13%. Mortgage DailyCNBC
That’s worth sitting with. The market’s live question has not been how fast the Fed cuts — it has been whether the Fed hikes. At the June FOMC meeting, officials’ projections showed a rate hike as more likely in 2026 than a cut, and that hawkish shift has been putting upward pressure on mortgage rates. NAHB does not expect the 30-year fixed to be consistently below 6% until the end of 2027. U.S. News & World Report
Planning implication: any 2027 pro forma built on “rates will be lower by then” is running on an assumption the bond market does not currently share. Build the downside case at today’s rates or higher.
Material Costs and the Tariff Calendar
No new PPI data this week — the June figures publish next Wednesday. The structure we’re pricing against is unchanged: steel, aluminum and copper items made entirely or mostly from those metals carry a 50% tariff, derivatives 25%, industrial and electrical equipment incorporating those materials (transformers, panel boards, conduit) 15%, softwood lumber 10% with derivatives at 25%, and a global 10% baseline tariff in effect through July 2026. Tax Credit Advisor
⚠️ Two weeks out: industry advisories have flagged July 24 as a key expiration date on the tariff calendar, alongside the Section 301 procedural transition, and recommend reviewing key materials — steel, copper, cement, major electrical items — monthly with additional checks around those regulatory dates so estimators can adjust before commitments lock in. ABC Carolinas
Anything we’re pricing between now and month-end on imported metals or MEP equipment should carry escalation language rather than a firm number.
Labor Trends
No new releases this week. The standing picture: ABC estimates the industry needs roughly 349,000 net new workers in 2026, rising to 456,000 in 2027. NAHB reports immigrants make up 34% of construction workers nationally, exceeding 60% in drywall, roofing and plastering, with participation approaching or surpassing 40% in California. A joint AGC/NCCER survey found 28% of construction firms experienced workforce disruptions tied to ICE activity within the prior six months — about 10% lost workers directly, and another 20% said their subcontractors did. Constructionowners
State-level employment data for June publishes later this month. Given four consecutive months of California leading the nation in construction job losses, plan crews on the assumption that skilled availability stays tight even as the aggregate state number falls.
Bottom Line
- Don’t read the DMI dip as a demand warning. It’s a data-center composition effect. Institutional planning up 10.9% is the signal that matters for a general contractor.
- Stress-test 2027 budgets at current or higher rates. The market is pricing hike risk, not cut certainty.
- Get escalation language into anything metals-heavy before July 24.
- Institutional and public work deserves more of our business development time this quarter than private commercial does.
Sources
Dodge Construction Network, “Dodge Momentum Index Slows 2% in June” (July 8, 2026) · CNBC, “Jobs Report June 2026” (July 2, 2026) · Mortgage Daily, “Mortgage Rate Forecast: Week of July 6–10, 2026” · U.S. News, “Mortgage Rate Forecast,” July 2026 · Tax Credit Advisor, “2026 U.S. Construction Costs — Q2 Update” · ABC Carolinas, “Construction Material Costs 2026–2027: Tariff Transition Risks” · Construction Owners Association, “Construction Workforce Crisis Deepens in 2026”
Informational only. Consult your financial, legal and insurance advisors before making company-specific decisions.