Economy Watch: Nonresidential Project Planning Sees Uptick in February

Dodge Data & Analytics Momentum Index rose for the fifth consecutive month, suggesting construction activity will continue to grow in 2017.
Source: Dodge Data & Analytics
Source: Dodge Data & Analytics

The Dodge Momentum Index rose 1.6 percent in February to 144.0 (2000 = 100) from its revised January reading of 141.7, according to a recent release from Dodge Data & Analytics. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which leads construction spending for nonresidential buildings by a full year.

February’s increase was due to a 4.4 percent jump in planning for institutional projects, while commercial planning slipped slightly, falling 0.3 percent for the month. The Momentum Index has now increased for five consecutive months. Even so, the underlying components continue to be volatile on a month-to-month basis as large projects continue to affect the data. The overall trend, however, is rising.

On a year-over-year basis, the Momentum Index is 22 percent higher than in February 2016, with commercial planning up 28 percent and institutional planning 15 percent ahead of last year. That’s a good sign, suggesting that construction activity will continue to see further growth as this year progresses.

Also on Wednesday, Automated Data Processing reported that, by its calculations, the U.S. private sector added 298,000 jobs in February. The report, which is derived from ADP’s payroll data, often doesn’t agree with the official employment numbers—which will be out Friday—but they sometimes point to which direction the official numbers are going. If that’s the case this time, February will be a strong month for job creation.