Dive brief:
- The Dodge Momentum Index, a benchmark that measures nonresidential construction planning, ended the year at one 3% jump. in December, driven by data center growth, according to the Dodge Construction Network. During the month, both commercial and institutional planning improved by 1.0% and 6.1%, respectively.
- December’s gain reversed Fall of 1.4% in November, when a slowdown in business planning pushed the index down, according to Dodge. That indicates support for construction activity this year, said Sarah Martin, associate director of forecasting for the Dodge Construction Network.
- “The DMI averaged a reading of 184.3 in 2023, reaching activity levels not seen since 2008,” Martin said in the statement. “While labor and construction cost issues will persist into 2024, a large number of projects are in the planning queue and will support construction spending through 2025.”
Diving knowledge:
Commercial planning, which includes projects for offices, hotels, shops and warehouses, has generally been in decline from its November 2022 peak due to high interest rates, supply chain disruptions and tighter lending standards, but Martin noted that the segment began to stabilize to close out the year.
For example, hotel and data center planning drove growth in the DMI’s commercial segment in December, while stronger healthcare and public building planning supported institutional activity, Martin said . However, year-over-year, it was 2% lower in December 2022, according to Dodge.
This decline is largely due to commercial construction, which followed the 2022 level by 9%. On the other hand, the institutional segment, which includes projects in education, life sciences and healthcare, increased by 14% during the same time period, according to Dodge.
Architectural turnover continues to be low
Meanwhile, the Architectural Turnover Index, a leading indicator of upcoming construction work nine to 12 months away, remained below 50 during the fourth consecutive month. Any score below 50 indicates declining business conditions, according to the most recent data from the American Institute of Architects.
However, the report has begun to identify encouraging signs in the pipeline, Kermit Baker, the AIA’s chief economist, said in the statement.
“Over the past three months, this pace of decline has accelerated, with companies in all specializations and in all regions of the country reporting that business conditions have weakened,” Baker said. “However, with signs that credit conditions are beginning to ease, companies are reporting an increase in inquiries for future projects.”
A total of 23 projects valued at $100 million or more entered planning in December, with six valued at more than $400 million, according to Dodge. Major commercial projects include:
The largest institutional projects to enter planning included:
