A decline across all commercial sectors contributed to a decrease in the July 2023 Dodge Momentum Index (DMI). However, Dodge Construction Network (DCN) reports that the DMI remains 21% higher than in July 2022, signaling sustained health throughout the industry.
The DMI for July dropped 0.9% to 193.4 from a revised June reading of 195.1. Over the month, the commercial component of the DMI remained somewhat flat, slipping 0.2%, while the institutional component declined 1.9%.
The DMI is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year.
“While both segments of the DMI fell this month, underlying project data points to divergent trends in the nonresidential sector,” says Sarah Martin, associate director of forecasting for DCN. “Compared to January 2023, commercial planning activity is down 10% through July, while institutional planning is up 16%. Distinctly large institutional projects entering planning in May temporarily inflated month-to-month trends, but activity has since ticked down.”
Martin adds that as 2023 winds down, weaker commercial activity will counter more resilient institutional activity propped up by public funding.
DCN officials report that hotel planning suffered the most setbacks in July while education and healthcare projects slowed. The DMI remains 21% higher yearly than in July 2022. The commercial and institutional components were up 13% and 35%, respectively.
A total of 15 projects valued at $100 million or more entered planning in July. The largest commercial projects to enter planning included the $400 million Kraft Heinz Distribution Center in DeKalb, Ill., and the $190 million PTC warehouse/distribution facility in San Antonio, Fla. The largest institutional projects to enter planning included the $240 million Lexington High School in Lexington, Mass., the $216 million courthouse improvement project in San Luis Obispo, Calif., and the $200 million Solano Hall of Justice courthouse in Fairfield, Calif.