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Dodge Construction Network (DCN) reports that August’s Dodge Momentum Index (DMI) declined 6.5% to 178.0 from a revised July reading of 190.3. In August, the commercial sector dropped 1.9%, and the institutional sector fell 14.8%.
Dodge Momentum Index’s August data indicates that declines were felt mostly in education, healthcare and amusement planning. An increase in hotel planning helped offset a slowdown in office activity. Photo courtesy of Acton Crawford.
The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.
Sarah Martin, DCN’s associate director of forecasting, says the declines could result from tightening lending standards and increasing interest rates.
“Overall activity remains above historical norms, but weaker market fundamentals continue to undermine planning growth,” says Martin. “It’s likely that the full year of tightening lending standards and high interest rates has begun to affect institutional planning, which has otherwise been resistant to these market headwinds. Also, planning in the sector continues to revert from the strong spike in activity back in May. As we move into the final four months of 2023, commercial and institutional planning will continue to be constrained.”
DMI data indicates that declines were felt mostly in education, healthcare and amusement planning. An increase in hotel planning helped offset a slowdown in office activity. Year-over-year, the DMI remained 4% higher than in August 2022. The commercial and institutional components were up 3% and 7%, respectively.
A total of 22 projects valued at $100 million or more entered planning in August. The largest commercial projects to enter planning included the $322 million Phase 5 of the Northern Virginia Gateway Data Center in Fredericksburg, Va., and the $225 million Kroger Distribution Center in Las Vegas. The largest institutional projects to enter planning included the $420 million Westborough Life Sciences Park in Westborough, Mass., and the $168 million Freeman Health System Hospital in Pittsburg, Kan.
