Construction Starts Continue to Strengthen

A bulldozer.

2018 was strong for construction starts. Although there was talk of slowing down in the latter half of 2019, that did not happen. In fact, the last half of 2019 has seen even stronger growth than the first. 

The early months of 2019 saw the Dodge Momentum Index, published by Dodge Data & Analytics, hovering in the mid 140’s (based on an index in which the year 2000 is set at 100). The Index is a monthly measure of the initial report for nonresidential building projects in planning, which has been shown to lead construction spending for nonresidential buildings by a full year. In July, the Index took a deep dip to 138.9¾from 145.6 in June¾but bounced back slightly in August to 139.6.

Then, rather than continue to dip as predicted by some industry observers, the Index has actually been climbing ever since: 143.6 in September, 150.9 in October and155.3 in November.

The increase in November was the result of a 6.5% increase in institutional construction starts, from 126.5 in October to 134.8 in November, and a 0.7% increase in the commercial construction starts, from 170.6 in October to 171.9 in November.

“The overall Momentum Index has staged somewhat of a resurgence over the last few months, increasing nearly 15% from its lowest point earlier in the year,” the report said. “In fact, it is currently flirting with a new cyclical high.”

The reported added that month-to-month planning data continues to be “lumpy in nature,” as the presence or absence of large projects leads to greater volatility.

As far as 2020 construction starts are concerned, Dodge Data & Analytics is sticking by the prediction it has been making for the last several months, that “the underlying trend of the Momentum Index continues to suggest that construction activity in 2020 will not crater but will moderately ease relative to this year’s level.”

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