Dodge Momentum Index Flat in May

The Dodge Momentum Index moved a scant 0.1% lower in May to 129.2 (the year 2000 = 100) from the revised April reading of 129.4. The commercial component of the Momentum Index rose 1% 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 that 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, Calif., and a $195 million warehouse in Perris, Calif. The leading institutional projects were the $213 million Kaiser Permanente hospital in San Marcos, Calif., and the $100 million Indiana University Health Methodist Hospital in Indianapolis.

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.