Dodge Momentum Index Loses Steam in June
Following six months of consecutive gains, the Dodge Momentum Index fell to 165.8 (2000=100) in June, down 5 percent from the revised May reading of 175.1. The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
The decline in June was the result of losses in both institutional planning, which fell 7 percent, and commercial planning, which lost 4 percent.
Uncertain demand for some building types, such as retail and hotels; higher material prices; and continued labor shortages are weighing down new project planning. Even with June’s decline, however, the Momentum Index remains near a 13-year high and well above last year. Compared to a year earlier, both commercial and institutional planning were significantly higher than in June 2020―39 percent and 46% respectively. Overall, the Momentum Index was 41 percent higher.
A total of 13 projects with a value of $100 million or more entered planning during June. The leading commercial projects were a $194 million data center in Dulles, Virginia, and the $109 million FedEx warehouse in Cedar Rapids, Iowa. The leading institutional projects were the $300 million Mt. Edgecumbe Medical Center replacement in Sitka, Arkansas and the $200 million renovation of the New York Public Library SNFL Branch in New York.
June’s retreat in planning activity is another sign that the recovery from the pandemic-led recession will be nonlinear. The current level of the Momentum Index and its underlying components, however, continue to signal that a more broad-based recovery in nonresidential construction starts will occur in 2022.