Volume 48, Issue 9- September 2013
Dodge Momentum Index Steadies
The Momentum Index 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. The index inched up 0.2 percent in July to 112.8, showing little change from its June reading of 112.6. While July’s growth rate was modest, the Momentum Index continues to hold onto the gains established earlier in the year and remains near its four-year high.
The July Momentum Index once again showed divergent paths for its main components as new plans for institutional buildings rose again and commercial plans declined. New development for institutional buildings increased 3.3 percent, bolstered primarily by a strong showing for amusement-related projects.
Nonresidential Building Activity Sees Slowdown
With slower than expected activity in the nonresidential construction sector in the first half of the year, the projections for growth in spending have been scaled back. Led by the hotel and retail project categories, the commercial sector looks largely unchanged, but a drop in demand for institutional projects caused reductions in spending projections to a 2.3 percent increase in 2013, with next year’s projections raised to 7.6 percent.
“Optimism for a stronger performance next year is based on the recent increase in domestic energy production, the boost to the general economy from a resurgent housing market, and improving employment figures that should help drive demand in the design and construction sectors,” says AIA chief economist, Kermit Baker, PhD, Hon. AIA.