Economy Watch: Nonresidential Building Planning Slips in January

Despite a decrease in the Dodge Momentum Index for the month, the index is 7.7 percent higher than a year ago, suggesting nonresidential building construction should continue to post gains in 2018.
Source: Dodge Data & Analytics, Dodge Momentum Index, January 2018
Source: Dodge Data & Analytics, Dodge Momentum Index, January 2018

Dodge Data & Analytics’ Dodge Momentum Index dropped 5.1 percent in January to 143.7 (2000 = 100) from the revised December reading of 151.5. The commercial component of the Momentum Index was 7.8 percent lower for the month, while the institutional component was down 0.9 percent.

The index is a measurement of the first (or initial, subject to revision) report for nonresidential building projects in planning, a circumstance that leads construction spending for nonresidential buildings by about a year. The fourth quarter of 2017 was particularly strong for the Momentum Index, and January’s retreat returns it to a more sustainable level, according to Dodge.

Compared with a year ago, the index is 7.7 percent higher, with both the commercial and institutional components showing growth compared with January 2017. More projects are being planned, in other words, and that suggests that nonresidential building construction should continue to post moderate gains in 2018.

In January, the report said, five projects each with a value of $100 million or more entered the planning phase nationwide. For the commercial sector, the leading projects were a $200 million office building in Boston and a $152 million warehouse in Banning, Calif., in the Inland Empire. The leading institutional projects were a $440 million water park in entertainment mecca Branson, Mo., and a $123 million assisted living facility in Milwaukee.