New Construction Starts Jump
Construction starts jumped in December 2017, according to the Dodge Momentum Index, which grew 3.6 percent in December to 153.9 from the revised November reading of 148.6. The index is a monthly measure of the first report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. December’s increase was due to an 8.6 percent jump in the institutional component of the Momentum Index, while the commercial component eked out a 0.7 percent gain.
For the full year 2017, the Momentum Index averaged 132.3, up 10.7 percent from the full year average for 2016, with similar improvement for the commercial sector (up 11.4 percent) and the institutional sector (up 9.7 percent). After retreating during the third quarter of 2017, the Momentum Index regained its upward track in the fourth quarter, which enabled December’s reading for the Momentum Index to be up 20.9 percent compared to the same month a year ago. The continued strengthening by the Momentum Index in 2017 suggests that nonresidential building construction activity will advance further during 2018.
In December, 12 projects each with a value of $100 million or more entered planning. For the institutional sector, the leading projects were a $200 million renovation of the Smithsonian Institute Visitor Center (The Castle) in Washington DC and a $175 million Veterans Affairs Living Center in Long Beach, Calif. The leading commercial projects were a $100 million hotel on Harvard University’s campus in Allston, Mass., and a $100 million office building in Little Rock, Ark.