Dodge Momentum Index Loses Ground in June

The Dodge Momentum Index dropped 6.6% in June to 121.5 (the year 2000 = 100) from the revised May reading of 130.1. The institutional component of the Momentum Index fell 11.7% while the commercial component declined by 3.5%.

The Momentum Index has shifted noticeably lower as the fallout from the recession continues to hold its grip on the construction sector. The overall Momentum Index fell 13% in the second quarter from the first three months of the year, with the commercial component 14% lower and the institutional component down 11%. While the recession has ended and recovery is underway, the return from one of the steepest downturns in U.S. history will be slow and fraught with risk. This holds true for the construction sector as well. While projects continue to enter planning, the slower pace suggests that recovery in the construction sector will be modest in coming months.

In June, seven projects, each with a value of $100 million or more, entered planning. The leading commercial projects were a $200 million warehouse in Windsor, Conn., and a $200 million office building in Somerville, Mass. The only institutional project over $100 million was a $115 million emergency room addition in Johnson City, N.Y.

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.