NEW YORK CITY—The underlying message to take away from July's 6% monthly increase in new construction starts? The second quarter's 11% decline in the Dodge Index was not the last word on industry trends.

July's increase, to a seasonally adjusted annual rate of $728.1 billion, “means the third quarter began on a healthy note, which should help to maintain the up-and-down pattern on a quarterly basis that's been present for construction starts over the past year, says Robert A. Murray, chief economist for Dodge Data & Analytics. “Within that up-and-down pattern there remains a modest upward trend, as it appears that construction starts are still in the process of reaching a peak, as opposed to having already reached a peak.”

On a percentage basis, the big gainer was nonbuilding construction, up 26% from the previous month to a seasonally adjusted, annualized $195.8 billion for July. Within that realm, public works categories as a group rose 12%, coming back after a 7% decline in June. Water supply in particular vaulted 136%, due mainly to the launch of the $844-million Vista Ridge water supply pipeline project in San Antonio, TX. Murray sees this as “hesitant signs of improvement” in public works momentum after the sluggish activity seen earlier in 2017.