Dodge Momentum Index dips in July

The Dodge Momentum Index, issued by Dodge Construction Network, declined 0.9 percent in July to 193.4 from the revised June reading of 195.1.

According to Dodge, the momentum index is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings but a full year.

Over the month, the commercial component of the momentum index remained relatively flat, ticking down 0.2 percent, while the institutional component fell 1.9 percent.

“While both segments of the index fell this month, underlying project data points to divergent trends in the nonresidential sector,” says Sarah Martin, associate director of forecasting at Dodge Construction Network. “In comparison to January 2023, commercial planning activity is down 10 percent through July, while institutional planning is up 16 percent.

“Distinctly large institutional projects entering planning in May temporarily inflated month-to-month trends, but activity has since ticked down,” Martin adds. “As we progress through the remainder of 2023, weaker commercial activity, resulting from tighter lending standards and higher interest rates, will counter sturdier institutional activity, bolstered by public funding and less sensitivity to interest rates.”

Analysis by sector

All commercial sectors pulled back or remained flat over the month of July.

Hotel planning saw the largest month-over-month decline, marking four months of consecutive drops in the sector. July also saw a deceleration in the number of education and healthcare projects entering planning — the two largest institutional segments.

While two sizable public projects entered planning and pushed activity in the sector to double-digit gains, it was not enough to push the institutional portion of the index positive. Year over year, the momentum index remains 21 percent higher than in July 2022. The commercial and institutional components were up 13 percent and 35 percent, respectively.

Specific projects

A total of 15 projects valued at $100 million or more entered planning in July.

The largest commercial projects to enter planning included the $400 million Kraft Heinz Distribution Center in DeKalb, Illinois, and the $190 million PTC warehouse/distribution facility in San Antonio, Florida.

The largest institutional projects to enter planning included the $240 million Lexington High School in Lexington, Massachusetts, the $216 million courthouse improvement project in San Luis Obispo, California, and the $200 million Solano Hall of Justice courthouse in Fairfield, California.