The Dodge Momentum Index rose 2.4 percent in May to 119.4 from its revised April reading of 116.6, reports Dodge Data & Analytics.
According to Dodge Data, the increase in May was due to a 6.5 percent gain for projects entering planning in the commercial sector, which offset a 3.4 percent decline for projects in the institutional sector.
In May, six projects entered planning with a value that exceeded $100 million. For the commercial building sector, the two leading projects were two warehouses in Staten Island, N.Y. The first project was valued at $304 million and the second was valued at $141 million. For the institutional building sector, the leading project was a $252 million neuroscience building at Stanford University in Palo Alto, Calif.
The increased index in May places the overall index 3.6 percent higher than the level it was at one year ago. According to Dodge Data, this suggests there will be further growth in 2016 construction activity despite the subdued first gross domestic product report. It also indicates that lending standards are beginning to tighten for commercial projects.
Dodge Data adds that the commercial portion of the index rose in May for the second consecutive month and that it is at its highest level since September 2015. This recent improvement for commercial projects provides some evidence that construction plans are moving forward after the drop-off in planning that occurred in late 2015. Additionally, institutional planning is now 1.3 percent lower than it was in May 2015.
The Dodge Momentum Index 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, according to Dodge Data.
