Dodge Momentum Index Rose 9.1% in May
Hamilton, NJ, June 8, 2021-The Dodge Momentum Index moved 9.1% higher in May to 178.0, up from the revised April reading of 163.2.
The Momentum Index, issued by Dodge Data & Analytics, is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year.
May’s jump was the result of a large increase in commercial planning activity, which posted its strongest month-over-month increase since October 2017. Institutional planning, meanwhile, fell by less than one percentage point.
Commercial planning had been in a holding pattern over the last four months, but broke out in May due to several sizable data center, office and warehouse projects that peaked in a 13-year high for the commercial component of the Momentum Index. While essentially flat in May, institutional planning remains at levels not seen since 2009. On a year-over-year basis, both commercial and institutional planning were up from May 2020 (38% and 47%, respectively). The Momentum Index overall was also 41% higher than in May 2020.
A total of 21 projects with a value of $100 million or more entered planning during May. The leading commercial projects were a $500 million conversion of a coal-burning power plant to a data center in Barker, New York and a $450 million office campus in Los Angeles, California. The leading institutional projects were the $250 million Houston Methodist Hospital Campus in Cypress, Texas and the $250 million Landmark Center in Boston, Massachusetts.
The rising trend in planning activity is a good sign that the economic recovery is starting to spread into the construction sector. However, these projects are unlikely to have an impact on construction starts this year. Rising material prices and a continued shortage of skilled labor have led to project delays. On the upside, construction starts are shaping up for a healthy increase in 2022.