McGraw-Hill Construction Debuts the Dodge Momentum Index

NEW YORK, May 17, 2012 /PRNewswire/ --McGraw-Hill Construction today launched the Dodge Momentum Index, a 12-month leading indicator of construction spending for nonresidential building. Based on a 91% correlation between construction planning reports, as reported by Dodge, and the Commerce Department's Put in Place spending over the past 10 years, the index is an early and accurate leading indicator of future construction spending. It will prove useful to building product manufacturers, AEC firms, construction industry professionals, economists and Wall Street analysts. The index will be issued monthly.

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The predictive accuracy of the index is derived from the source of data that feeds it: the proprietary Dodge 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 estimate of construction spending, a key input for the nation's Gross Domestic Product (GDP). One-third of projects in the Dodge database are in the planning stage-the projects that feed the new Dodge Momentum Index.

"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 construction starts down the road and generate construction spending dollars," said Kate Cassino, Vice President of Product Development for McGraw-Hill Construction. "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."

In designing the new Dodge Momentum Index, McGraw-Hill examined more than a decade of monthly planning data (from January 2002 to February 2012) which produced an exceptionally strong correlation of 91% with the Commerce Department's nonresidential building construction put in place spending. Importantly, the analysis shows that changes in the Dodge nonresidential new planning data leads changes in Commerce spending put in place by twelve months.

Since reaching bottom in July 2011 at a level of 77.1 (2000=100), the index has trended up in all but two months. In April 2012, the Dodge Momentum Index climbed 1.0 points from the previous month to reach a level of 94.7. According to Robert Murray, Vice President of Economic Affairs for McGraw-Hill Construction, "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. This is good news for an industry that has been strongly hit by declines since the 2009 recession."

The strong relationship established between the Dodge Momentum Index and construction spending, with its full year of lead time, means that the index is likely to prove extremely valuable to construction industry professionals, as well as economists and Wall Street analysts. For McGraw-Hill Construction's customers, the index serves as an excellent full year leading indicator of future construction spending and demand for construction products and services. For economists, it's an accurate leading indicator of construction spending when assessing longer term outlooks and the health of the construction industry against the broader economy. For Wall Street analysts, the index provides directional information that acts as a variable to help underscore their predictive models, and health of the sector.

"The Dodge data provides daily opportunity for discovery and inspiration for new ideas and new offerings to help our customers plan ahead smartly and succeed," said Keith Fox, President, McGraw-Hill Construction. "The Dodge Momentum Index joins the ranks of Dodge BuildShare and Dodge SpecShare, our latest intelligence offerings that provide building product manufacturers and AEC professionals with trends, forecasts, competitive intelligence, and deep relationship building tools. The Dodge Momentum Index is also a new source of credible analysis for economists and analysts who need to measure markets."

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.

For more information, download the Dodge Momentum Index white paper at http://construction.com/download/Dodge_Momentum_Index_WhitePaper.pdf.

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McGraw-Hill Construction Debuts the Dodge Momentum Index