The Dodge Momentum Index rose a sharp 11.2 percent in June to 134.4 from its revised May reading of 120.8 (2000=100). 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 Index rose in June as the result of a 14.6 percent increase in the institutional component and a 7.7 percent increase in the commercial component. The gain in commercial planning reports is a positive development since that component of the Index had been moving in a fairly horizontal fashion since late-2014.
The increase in the institutional component returns it to levels seen earlier this year. The overall Index is now at its highest level since early-2009; however, it has proven to be volatile on a month-to-month basis over the last two years. This unpredictability may continue through the remainder of the year, given the uncertainty related to the health of the U.S. economy and the upcoming November elections.
In June, 14 projects entered planning with a value that exceeded $100 million. For the commercial building sector, the leading projects were a $450 million hotel and convention center in Elk Grove, Calif., and a $400 million hotel in South Bend, Ind. The leading institutional projects were a $230 million hospital in Santa Monica, Calif., and a $158 million hospital in Columbus, Ohio.