Construction spending in the nonresidential sector is taking a hit, according to a leading economic indicator. The Dodge Momentum Index, which has been shown to lead nonresidential building construction spending by one year, is in a bit of a slump following September's 2.6% downturn from August. The index also declined in August after a string of strong results this summer. The current reading is 159.5, down from 163.7 in August.
The commercial and institutional building components also dropped in September compared to August, the latter only with a 10th of a percent fall. Commercial building sank more than 4% last month in the index from Dodge Data & Analytics.
Even with the recent slip to start the fall season, the index saw a nearly 1% increase from the second quarter to the third quarter. "In fact, the Momentum Index is now returning to a more sustainable level of activity given the overall age of the current construction cycle," states the report from Dodge.
There were 12 projects that entered planning in September valued at $100 million or more. Leading the institutional side were a $175 million research lab in Massachusetts and a $150 medical school building in Arizona. On the commercial side were a $116 warehouse in Delaware and a $100 million mixed-use building in California. The index measures the initial report of nonresidential building projects in the planning stage.
-Michael Miller, managing editor
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