The Dodge momentum index moved up 2.3 points or 1.6% in February as the Institutional sub-index surged ahead 4.4% to an all-time high of 133.7. The commercial sub-index stalled in February falling back 0.3% to 152.3.
The Dodge momentum index was launched on May 12, 2012 with the intent of becoming a 12 month leading indicator of non-residential construction. At that time, Dodge reported at 91% correlation between its construction planning reports and the Commerce Department’s Put in Place spending over the previous 10 years. The index bottomed out at a level of 77 (2000 = 100) in July 2011, reached a high of 188 in early 2009 and currently stands at 141.7.
Figure 1 presents the Dodge momentum index and its 12 month moving average (12MMA) from 2012 to present. The index has been trending higher, increasing month on month for five consecutive months. Dodge reports that the momentum index is up 22% year on year which portends further growth in non-residential construction for 2017. Figure 2 breaks out the commercial sub-index and its 12MMA. Commercial planning is 28% higher year on year per Dodge. Figure 3 shows the Institutional sub-index and its 12MMA. It show a lot more volatility than the private sector commercial index but shows a slight upward slope when viewed on a 12MMA basis. Dodge reports that institutional planning is 15% higher than last year.
Several recent large scale projects have combined to increase NRC spending and boost the Dodge momentum index. The leading commercial projects announced in February were a $470 million hotel in Nashville TN and a $130 million hotel and shopping center in La Puente CA. Commercial projects commencing in January were the $3.4 billion Central Terminal Building at LaGuardia Airport in New York as well as groundbreaking for several other large airport terminal projects, a $750 million natural gas-fired power plant in Florida plus two pipeline projects – the $900 million Plains Diamond oil pipeline in Arkansas and Oklahoma, and the $767 million Presidio Crossing natural gas pipeline in Texas. For the institutional building sector, the leading projects were a $100 million hospital in Westampton NJ and a $100 million military barracks in Great Lakes IL.
The strong relationship established between the Dodge Momentum Index and actual construction spending, with its full year of lead time, means that the index is a valuable tool to construction industry professionals including you our valued customers.