The Dodge Momentum Index dropped 6.6% in June to 121.5 (2000=100) from the revised May reading of 130.1. The Momentum Index, issued by Dodge Data & Analytics, 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 institutional component of the Momentum Index fell 11.7% while the commercial component declined by 3.5%.
The Momentum Index has shifted noticeably lower as the fallout from recession continues to hold its grip on the construction sector. The overall Momentum Index fell 13% in the second quarter from the first three months of the year, with the commercial component 14% lower and the institutional component down 11%. While the recession has ended and recovery underway, the return from one of the steepest downturns in U.S. history will be slow and fraught with risk. This holds true for the construction sector as well. While projects continue to enter planning, the slower pace suggests that recovery in the construction sector will be modest in coming months.
This graph shows the Dodge Momentum Index since 2002. The index was at 121.5 in June, down from 130.1 in May.
According to Dodge, this index leads “construction spending for nonresidential buildings by a full year”. This suggests a decline in Commercial Real Estate construction in 2020 and early 2021.