The Dodge Momentum Index eked out a small gain in May, moving 1.8 percent higher to 167.8 (2,000=100) from the revised April reading of 164.9. The 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.
May’s gain was the result of a 4.7 percent increase by the commercial component of the index, while the institutional component fell 2.4 percent. The Momentum Index has posted solid gains through the first five months of 2018, rising 19 percent from the same period of 2017 and reaching a level not seen since mid-2008. However, the upturn to this point shows that the current expansion has been more drawn out than what occurred during the previous cyclical expansion.
It has been nearly seven years since the Momentum Index hit bottom in July 2011, but it has yet to eclipse its previous peak set in December 2007. At the same time, the recent gains suggest that construction spending for nonresidential buildings should remain healthy through the rest of 2018.
In May, 16 projects each with a value of $100 million or more entered planning. The two leading commercial projects were a $310 million mixed-use complex in Newark, New Jersey, and the $300 million second phase of Nvidia’s headquarters in Santa Clara, California. The leading institutional projects were the $300 million Milwaukee County safety building in Milwaukee, Wisconsin, and the $300 million Texas Health Harris Methodist Hospital expansion in Fort Worth, Texas.