Commercial planning fell 3% and institutional planning dropped 9%.
The Dodge Momentum Index declined 6% in June to 155.8 (2000=100) in July, a 6% decline from the revised June reading of 164.9.
Both components of the Dodge Data & Analytics’ Momentum Index, a monthly measure of the first report for nonresidential building projects in planning, fell in July. Commercial planning fell 3% and institutional planning dropped 9%.
“The momentum index posted strong gains through much of the winter and spring as the economy and building markets began to stabilize following the recession,” according to Dodge Data & Analytics. “While the economy has continued its forward progress through the summer, the index has regressed somewhat as higher material prices and shortages of skilled labor continue to exert a strong influence over the construction sector.”
Even with these declines in June and July, the index sits near 2018 levels. In addition, the index was 25% higher than in July 2020, with institutional planning up 27% and commercial planning 25% higher than last year.
Eleven projects with a value of $100 million or more entered planning during July. A $240 million Microsoft Data Center in San Antonio, TX and a $200 million Amazon, Inc. fulfillment center (Project Basie) in Woodburn, OR were the leading commercial projects. The $225 million Baptist Health Hardin Medical Pavilion in Elizabethtown, KY and the $200 million AdventHealth Narcoossee campus in Orlando, FL, were the leading institutional projects.
“The pressures caused by higher material prices and labor are unlikely to ease anytime soon and, when added to the rising number of COVID-19 cases caused by the Delta variant, raises concerns that the nascent recovery in construction may stall in the months ahead,” according to Dodge Data & Analytics.
Other economic data also suggests a softening in the economy due to the variant.
The variant is already hindering some buying behavior and hitting consumer confidence hard, according to a new report by Morning Consult, which says consumer confidence has fallen sharply since the beginning of July, dropping 4.6%. Overall, consumer confidence is at its lowest point since March 9, 2021, and just went through its most significant three-week decline since November 2020, when the third wave of COVID infections was tearing through the country.
Restaurants provide an example of how sharply consumer confidence has declined. The share of adults comfortable going out to eat at a restaurant or café dropped three percentage points to 68% from early July to July 24.
“If consumers increasingly opt to stay away from activities they deem too risky, sales at businesses such as restaurants, hotels, gyms and airlines are likely to suffer, potentially undermining the recovery in the service sector and the US economy as a whole,” Morning Consult writes.
Source: “Dodge Index Decline Raises Concerns Construction Recovery May Stall“
