Dodge Momentum Index eclipses previous high

The Dodge Momentum Index jumped 7 percent in May to 176.2, up from a revised April reading of 165.2.

The momentum index, issued by Dodge Construction Network, is a monthly measure of the initial report for nonresidential building projects in planning, shown to lead construction spending for nonresidential buildings by a full year. In May, the institutional component of the momentum index rose 9 percent, and the commercial component increased 6 percent.

May’s increase pushed the level of planning above the most recent cyclical high in November 2021.

Throughout May, Dodge says commercial planning was led by an increase in office and hotel projects. Institutional planning was boosted by an increase in education and health care projects entering planning.

Year over year, the momentum index was 17 percent higher than in May 2021. The commercial component was 24 percent higher and the institutional component was 8 percent higher than a year earlier.

Specific projects

A total of 19 projects with a value of $100 million or more entered planning in May.

The leading commercial projects were the $333 million Bitcoin Mining Facility in Corsicana, Texas, and the $300 million Gun Lake Hotel & Resort in Wayland, Michigan.

The leading institutional projects were a $250 million Drexel University life sciences building in Philadelphia and the $160 million Colorado Research Exchange life sciences campus in Broomfield, Colorado.

Despite higher interest rates and fear of recession, Dodge says nonresidential building projects continue to steadily enter the planning cycle. While higher prices and labor shortages may result in projects reaching groundbreaking later in 2022 or early 2023, they provide hope that the construction sector will be able to withstand a potential economic slowdown fed by higher interest rates.