Dodge Construction Index Hits 14-year High

By Karen L. Edwards, COO. 

Slight gain in June puts the Momentum Index at its highest in 14 years. 

The Momentum Index is published by Dodge Construction Network and measures the number of non-residential building projects being planned. In June 2022, the index reported commercial planning was up 4.1% with institutional planning falling 6.2%. Most of the commercial growth was reported in warehouse projects.  

Richard Branch, chief economist for Dodge Construction Network, said in a statement, “A new cyclical high in the Momentum Index is a sign that developers feel that projects still have hope of moving forward, despite concerns of an impending economic slowdown. However, this sentiment will be tested in the months to come as higher interest rates eat away at business and consumer confidence.” 

June 2022 saw 27 projects enter the planning phase with a value of $100 million or more. According to Dodge, the projects were as follows: 

• Commercial - $400 million Somerset Nevele Resort in Ellenville, New York and the $300 million first phase of the Ten85 warehouse building in Buckeye, Arizona.  

• Institutional - $390 million 10 Twin Dolphin life science campus in Redwood City, California and the $280 million expansion of the Connecticut Childrens Patient Tower in Hartford, Connecticut. 

With recession rumors swirling in the industry, these numbers seem to indicate otherwise. In a recent episode of Roofing Economic Outlook™ on RoofersCoffeeShop®, Angi Chief Economist Mischa Fisher explains how the federal reserve raising interest rates affects businesses and the overall economy. Regarding whether we will be entering a recession he says, “Listeners should take everyone’s advice with a certain grain of salt because we just don’t have enough data to reach a firm conclusion.”  

Associated Builders and Contractors (ABC) released a construction employment report that showed positive growth in June.  “There was an abundance of available, unfilled jobs as the summer travel season swung into high gear,” said ABC Chief Economist Anirban Basu. “Meanwhile, inflation has induced many people back into the labor market in order to offset elevated costs for essentials and luxuries alike. That served as a recipe for another month of solid job growth in America, with contractors collectively adding 13,000 jobs last month.” 

Basu cautions that employment numbers are typically a lagging indicator, and he expects the Federal Reserve to continue to raise interest rates. “Higher borrowing costs working in conjunction with lofty materials prices and rapidly rising worker compensation mean that the threat of significant numbers of project postponements and cancellations remains firmly in place.” 

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