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Dodge Momentum Index Dips in September

Dodge Momentum Index Dips in September

New York — The Dodge Momentum Index retreated 0.8% in September compared to August, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. 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 September Momentum Index came in at 94.7 (2000=100), down from a revised 95.4 in August and 96.7 in July.  While the longer term trend is still viewed as positive, the Index appears to be experiencing a temporary pause.  Uncertainty, particularly related to the impending presidential election and year end expiration of the Bush tax cuts combined with automatic spending cuts (the “fiscal cliff”), is likely the main contributor to this short-term hesitation in future development plans.

The uncertainty seems to be weighing more heavily on the commercial segment of the Index, which dropped by 5.4% in September.  Institutional building, by comparison, rose by 4.0%.  A decline in the volume of education projects was offset by the inclusion of two large healthcare developments: the $300 million Children’s Hospital proposed in San Antonio TX and the $200 million Froedtert Hospital slated in Milwaukee WI.  The decline for the commercial segment of the Index was cushioned by two $100 million office campuses—one in Midland, TX and one in Wesley Chapel, FL—that entered planning in September.

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