Dive Brief:
- The Dodge Momentum Index surged 11.2% in June to 134.4, a significant rise from its upwardly adjusted May number of 120.8, due to increases in both institutional (14.6%) and commercial (7.7%) planning.
- The Index, at its highest mark since 2009, saw a robustness in the commercial sector that has been lacking for almost two years, while the institutional sector snapped back to early-2016 levels.
- Dodge warned that the Index's monthly volatility could continue, depending on the overall U.S. economy as well as the outcome of the November election.
Dive Insight:
The Momentum Index is a monthly measure of initial reports of nonresidential building projects in the planning stages, which usually lead nonresidential construction spending by one year.
In June, 14 projects of more than $100 million in value, up more than double from May, entered the planning stages, according to Dodge. Among the large commercial projects entering planning in June were a $450 million hotel and convention center in Elk Grove, CA, and a 400 million hotel in South Bend, IN. Entering the planning stage in the institutional sector were two large hospital projects — a $230 million facility in Santa Monica, CA, and a $158 million hospital in Columbus, OH .
Hotels played a prominent role in this month's Index, reflective of a U.S. hotel construction boom currently underway. Last month, hotel research firm Lodging Econometrics reported that the U.S. had 4,471 hotel projects (551,965 rooms) either in progress or in the planning stages, putting the country in the lead of all hotel construction in the rest of the world. New York City had the most hotel projects in progress (187), representing 32,136 rooms.
Although up 2.8% year over year, the Commerce Department reported that overall construction spending fell 0.8% in May, with dips in both private nonresidential (-0.7%) and public (-2.3%) construction. However, the strong upward trajectory of this month's Index could signal that a spending bump is likely to come in the next year.
