The Dodge Momentum Index rose 2.4% in May to 119.4 from its revised April reading of 116.6 (2000=100). The 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. The increase for the Index in May was due to a 6.5% gain for projects entering planning in the commercial sector, which more than offset a 3.4% decline for such projects in the institutional sector. May’s increase places the overall Index 3.6% higher than its year-ago level, suggesting further growth in construction activity in 2016 despite the subdued first quarter GDP report and signs that lending standards are beginning to tighten for commercial projects. The commercial portion of the Index rose in May for the second consecutive month and 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 severe drop-off in planning that occurred with the financial market instability in late 2015. At the same time, institutional planning is 1.3% lower than it was in May 2015, settling back for now from the heightened activity reported in late 2015 and early 2016.
In May, six projects entered planning with a value that exceeded $100 million. For the commercial building sector, the leading projects were two warehouses in Staten Island, NY – one valued at $304 million and one at $141 million. For the institutional building sector, the leading project was a $252 million neuroscience building at Stanford University in Palo Alto, CA.
Leading Indicator of Construction Spending
Dodge Data & Analytics’ monthly Dodge Momentum Index is a twelve month leading indicator of construction spending for non- residential building.
The index is an early and accurate leading indicator of future construction spending, based on a correlation ratio of 0.91 (1.0 is perfect correlation) between construction planning reports as reported by Dodge and the Commerce Department’s Construction Spending Put in Place.
Importantly, changes in the Dodge nonresidential new planning data lead changes in Commerce spending put in place by twelve months. 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.
The strong relationship established between the Dodge Momentum Index and the Commerce Department’s Construction Spending Put in Place, with its full year of lead time, means that the index provides value to building product manufacturers, AEC firms, industry professionals, as well as economists and Wall Street analysts.
For more information, download the Dodge Momentum Index white paper here.
About Dodge Data & Analytics
Dodge Data & Analytics is a technology-driven construction project data, analytics and insights provider. Dodge provides trusted market intelligence that helps construction professionals grow their business, and is redefining and recreating the business tools and processes on which the industry relies. Dodge is creating an integrated platform that unifies and simplifies the design, bid and build process, bringing data on people, projects and products into a single hub for the entire industry, from building product manufacturers to contractors and specialty trades to architects and engineers. The company’s products include Dodge Global Network, Dodge SpecShare®, Dodge BuildShare®, Dodge MarketShare™, and the ConstructionPoints and Sweets family of products.
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More detailed and longer term projections as well as custom research are available from Dodge Data & Analytics. For further information on the purchase of statistical and forecast products, call (800) 591-4462 or visit us at: http://analyticsstore.construction.com.