The Dodge Momentum Index inched up 0.2 percent in July to 112.8; little changed from its June reading of 112.6, according to McGraw Hill Construction.
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.
While July growth was modest, the Momentum Index continues to hold onto the gains established earlier in the year and remains near its four-year high. This stability suggests that developers perceive the environment for new construction to be generally improving, but remain cautious about the tepid performance of the economy and its impact on market fundamentals.
Main components of the Momentum Index once again diverged in July: new plans for institutional buildings rose again, while commercial plans declined.
New development for institutional buildings increased 3.3 percent, bolstered by a strong showing for amusement-related projects. Several casino projects entered the planning phase in July, including a $200 million slot-machine complex in Tewksbury, Mass. Along with Tewksbury, three other towns in Massachusetts will be competing for the one slot-parlor license to be issued by the state, including Millbury and Leominster. Other new amusement-related planning projects for July included an $85 million performing-arts complex in Lubbock, Texas, and a $75 million sports and entertainment complex in Alexandria, Va.
Meanwhile, the commercial-building component of the Momentum Index fell by 3.0 percent in July, weighed down by declines for new hotel and warehouse plans.