The Dodge Momentum Index fell 4 percent in November to 171.7, down from the revised October reading of 178.1. The Momentum Index, issued by Dodge Construction Network, is a monthly measure of the initial report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. In November, commercial planning fell 8 percent while institutional planning moved 5 percent higher.
Nonresidential in a volatile cycle
The value of nonresidential building projects continues to move in a sawtooth pattern, alternating between a month of gains followed by a loss. Since the pandemic began, nonresidential building projects entering planning have been more volatile than in past cycles, likely driven by increased challenges from higher prices and lack of labor.
Momentum at 14-year high
Despite these issues and a lack of underlying demand for some building types such as offices and hotels, the Momentum Index remains near a 14-year high. Compared to November 2020, the Momentum Index was 44 percent higher in November 2021. The commercial planning component was 45 percent higher, and institutional was 41 percent higher.
Growth Remains uncertain
Planning data continues to suggest a healthy level of construction to come in 2022. However, due to higher prices and shortages of labor, actual growth is expected to be modest. The new Omicron variant for COVID-19, and its potential impact on economic growth, highlights the tremendous uncertainly the construction sector will face over the coming year.
A total of 10 projects with a value of $100 million or more entered planning in November. The leading commercial projects were a $240-million Seefried Industrial Properties warehouse in Mesa, Arizona, and a $158-million Prologis warehouse in Lebanon, Tennessee. The leading institutional projects were the $450-million Wake Forest Baptist Medical Center in Winston-Salem, North Carolina, and the $241- million Hoboken High School in Hoboken, New Jersey.