The Dodge Momentum Index rose 2.8 percent in November compared to the previous month, according to McGraw Hill Construction, a division of McGraw Hill Financial. 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.
November’s increase brought the Momentum Index to 117.9 (2000=100), as it regained upward movement after pausing in October. The latest month was the highest reading for the Momentum Index since March 2009, although the current level is still well below the peak readings back in 2007 (when the Momentum Index averaged 183). The November upturn in plans for new construction may be a sign that October’s uncertainty over the budget and debt ceiling impasse is now easing – at least until those issues are raised again in January and February.
The November increase in the Momentum Index was driven by gains for both its commercial and institutional components. On the commercial side, the increases were widespread by project type, with the largest boost coming from a sharp gain in retail development. New retail projects entering the pipeline in November included a $278 million retail and entertainment center in Philadelphia, a $100 million retail and condominium project in Alameda, Calif., and a $50 million retail and apartment development in Sterling, Va.
The increase in institutional plans was helped by a significant gain for education-related buildings, the largest of which were a $100 million Wilson Pacific Elementary and Middle School Campus in Seattle, an $84 million Science and Health Professions Building at Hunter College in New York, and a $61 million renovation/expansion to a high school in San Clemente, Calif.