The Dodge Construction Network on May 10 reported its latest Dodge Momentum Index, an economic indication for nonresidential building projects. The index tracks the dollar value of commercial and institutional projects in the earliest planning stages. Tracking these projects gives insight into future construction spending, usually about 12 months in advance.
The dip in April was no surprise, said Sarah Martin, associate director of forecasting at Dodge Construction Network, in a video presentation of the latest index.
“On par with our expectations, the Dodge Momentum Index continued to recede in April,” she said. “As economic conditions weakened and the uncertainty surrounding the banking sector persisted.”
The index is now 16% below the November 2022 peak, she said. Commercial building was down 8% driven by slower activity in the office, hotel and retail sectors, while institutional building was up 0.3%. Building planning in education decreased, but that was offset by a rise in healthcare and amusement projects, she said.
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Year over year, the index is 11% higher than it was in April 2022, with commercial up 7% and institutional up 17%.
“This elevation in the momentum index should provide hope that construction activity will return to growth in 2024,” Martin said.
Lending standards for small banks have substantially tightened in response to the current banking issues, however, she added.
“This could further wane confidence in owners and developers as we continue further into the year,” she said.
