Nonresidential building index debuts with positive 2013 market projection

Source: McGraw-Hill Construction, New York City

A new 12-month leading indicator of nonresidential building spending, the Dodge Momentum Index will be available monthly for material and product interests; architectural, engineering and construction professionals; and, economist and Wall Street analysts.

Based on a 91 percent correlation between Dodge construction planning reports and the Commerce Department’s Put in Place spending over the past 10 years, the index is poised as an early and accurate leading indicator of future construction spending, McGraw-Hill Construction officials note. Its predictive accuracy is derived from the source of data that feeds it, they add: A proprietary database of first-issued construction planning reports. Dodge is the sole private provider of construction starts and project data analysis to the U.S. Census Bureau, supporting the federal government’s monthly construction spending estimate, a key gross domestic product input. One-third of projects in the Dodge database are in the planning stage and serve as the main index inputs.

“The strength of the new Dodge Momentum Index is that it’s based on proprietary planning data from Dodge’s national network of reporters. These are individual, real-life projects, many of which will become starts down the road and generate construction spending dollars,” says McGraw-Hill Construction Vice President of Product Development Kate Cassino. “We have the benefit of using our world-renowned Dodge project information to create a highly accurate index, rather than relying on survey-based data.”

“The relatively steady movement upward since the middle of last year suggests that construction spending put in place for nonresidential buildings should begin to move in a more consistently positive direction during the second half of 2012,” notes McGraw-Hill Construction Vice President of Economic Affairs Robert Murray. “This is good news for an industry that has been strongly hit by declines since the 2009 recession.”

Additional details are available for the overall commercial and institutional sectors, and the sub-sectors of office buildings, retail and warehouse buildings, and education buildings. A white paper on the Dodge Momentum Index can be obtained here.

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