Dodge Momentum Index Slides in October for Third Consecutive Monthly Decline

Nov. 16, 2012
The Dodge Momentum Index slipped another 0.6% over the month in October, according to McGraw-Hill Construction.

The Dodge Momentum Index slipped another 0.6% over the month in October, according to McGraw-Hill Construction. The October Momentum Index retreated to 93.3 (2000=100), the third consecutive monthly decline following the most recent peak of 96.0 in July. The Momentum Index is a monthly measure of the first (or initial) reports for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.

A McGraw-Hill Construction press release said that after bottoming out in mid-2011, the Momentum Index had shown a hesitant upward trend in the construction market through July of this year, with monthly gains outweighing setbacks. The recent loss of momentum for the index over the past three months can be attributed in part to the high degree of uncertainty affecting the U.S. economy and construction industry, reflecting the U.S. presidential election and the looming fiscal cliff. In addition, plans for institutional building projects were particularly strong in recent months, but that strength dissipated in October given the continued tight budget conditions faced by states and localities.

The drop in the October Momentum Index was attributed entirely to a 1.3% decline in its institutional construction segment. In particular, the volume of publicly-financed construction projects fell back as fewer large-scale healthcare projects entered the planning phase. The decline in institutional building plans was partially offset by stability for commercial building plans, following lower activity in this segment during the previous two months.

The commercial building segment in October was helped by an increase in new plans for office projects, including an Apple data center in Prineville, Ore., and a new headquarters for Samsung in San Jose, Calif. The retail market also improved, with store projects entering the planning stage up modestly upward in October, supported by new plans for an outlet mall in Georgia.