The Dodge Momentum Index moved a scant 0.1% lower in May to 129.2 (2000=100) from the revised April reading of 129.4. 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. The commercial component of the momentum index rose 1.0% during the month, while the institutional component dropped 1.9%.
The resilience of the momentum index over the last two months has been remarkable in the face of the COVID-19 crisis and resulting economic recession. With May’s reading, the momentum index is down 17% from its most recent peak in July 2018. During the Great Recession, by contrast, the peak-to-trough decline was 62%. While the momentum index may move lower in the future, its present level continues to suggest there are enough projects entering planning to allow construction to begin a modest recovery in the third quarter.
In May, 11 projects each with a value of $100 million or more entered planning. The leading commercial projects were a $213-million warehouse in Riverside, California and a $195-million warehouse in Perris, California. The leading institutional projects were the $213-million Kaiser Permanente hospital in San Marcos, California and the $100-million Indiana University Health Methodist Hospital in Indianapolis, Indiana.