Lean Construction

Dodge Momentum Index Jumps in September 2015

DodgeSeptThe Dodge Momentum Index moved 5.8% higher in September to 133.5 (2000=100) from its August reading of 126.2. The Momentum Index 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. The impetus behind September’s gain was a 12.0% increase from the previous month in institutional building planning. State and local budgets, which finance many projects in the institutional category, continue to recover from their recessionary weakness. With this support, planning for new institutional buildings has trended upward over the past year, although in a saw-tooth pattern. Commercial construction, on the other hand, is at a more mature stage of its recovery and planning has been relatively more stable. Planning in the commercial category increased 1.8% in September.

There were a total of eight projects entering planning in September with a value that exceeded $100 million, split equally between commercial and institutional projects. In the commercial building sector, a $330 million office building for Fannie Mae in Washington DC, and a $150 million alteration of an office complex in Plano, TX entered planning. Within the institutional building sector, a $400 million hospital in Rockford, IL; and a $230 million clinic addition in Weston, FL entered planning.

Leading Indicator of Construction Spending

Dodge Data & Analytics’ monthly Dodge Momentum Index is a twelve month leading indicator of construction spending for non- residential building.

The index is an early and accurate leading indicator of future construction spending, based on a correlation ratio of 0.91 (1.0 is perfect correlation) between construction planning reports as reported by Dodge and the Commerce Department’s Construction Spending Put in Place.

Importantly, changes in the Dodge nonresidential new planning data lead changes in Commerce spending put in place by twelve months. The strength of the new Dodge Momentum Index is that it’s based on proprietary planning data from Dodge’s national network of reporters. These are individual, real- life projects, many of which will become construction starts down the road and generate construction spending dollars.

The strong relationship established between the Dodge Momentum Index and the Commerce Department’s Construction Spending Put in Place, with its full year of lead time, means that the index provides value to building product manufacturers, AEC firms, industry professionals, as well as economists and Wall Street analysts.

For more information, download the Dodge Momentum Index white paper here.

About Dodge Data & Analytics

Dodge Data & Analytics is the leading provider of data, analytics, news and intelligence serving the North American construction industry. The company’s information enables building product manufacturers, general contractors and subcontractors, architects and engineers to size markets, prioritize prospects, target and build relationships, strengthen market positions, and optimize sales strategies. The company’s brands include Dodge, Dodge MarketShare™, Dodge BuildShare®, Dodge SpecShare® and Sweets.

To learn more, visit www.construction.com.

More detailed and longer term projections as well as custom research are available from Dodge Data & Analytics. For further information on the purchase of statistical and forecast products, call (800) 591-4462 or visit us at: https://analyticsstore.construction.com.

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