McGraw-Hill Construction’s Dodge Momentum Index rose 2.7% in January, its second monthly increase in a row. 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.
The January increase for the Momentum Index marked its second monthly gain in a row, lifting it to 97.6 – the highest reading since mid-2010. This recent upturn follows a moderate decline for the Momentum Index that took place from August through November, when uncertainty related to the November 2012 elections and the looming fiscal cliff generally dampened investment. With the election results final and the fiscal cliff averted for the time being, plans for nonresidential building projects that may have been deferred are now moving ahead at a quicker pace.
According to a McGraw-Hill press release announcing the latest Momentum Index data, January's increase for the Momentum Index relative to December was the result of stronger activity for both its commercial and institutional segments. The 3.1% gain for the institutional segment in January was driven by a surge in new hospital projects entering the planning pipeline. These included a $202 million second phase to the Advocate Christ Hospital Patient Tower in Oak Lawn, Ill., and an $80 million expansion at the Geisinger Medical Center in Danville, Pa. The 2.3% gain for the commercial segment in January reflected an uptick in plans for new offices and stores. These included such projects as a new Chevron office complex in Texas and a mixed-use tower in San Francisco which entered planning.