Calculated Risk May 8, 2024 2:53 PM
From Dodge Data Analytics: Dodge Momentum Index rose 6% in April
The Dodge Momentum Index (DMI) released by the Dodge Construction Network rose 6.1% in April to 173.9 (2000 = 100) from a revised 164.0 in March. Commercial plans improved 12.6% and institutional plans declined 6.3% for the month.
“The Dodge Momentum Index (DMI) saw positive developments in April as a large volume of data center projects entered the planning stages,” said Sarah Martin, associate director of forecasting at Dodge Construction Network. “Unusually strong demand for cloud and AI infrastructure builds supported above-average activity in this sector. However, most other categories saw slower growth during the month. Across these industries, owners and developers are struggling with uncertainty about interest rates and labor shortages, which may have delayed decisions to put projects in the planning queue. More substantial growth in nonresidential planning activity should follow once interest rates begin to decline in the second half of 2024.”
The commercial sector of the DMI saw solid growth in April as a large number of data center projects entered the planning stages, while traditional office and hotel projects continued to show slower momentum. Warehouse planning was essentially flat. Within institutional, education and healthcare planning activity retreated again, in part due to continued weakness in life sciences and R&D lab activity this month. On a year-over-year basis, the DMI was 1% lower than in April 2023. The commercial sector was up 6% year-over-year, while institutional was down 15% from the same period.
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The DMI is a monthly measure of the value of nonresidential construction projects in the planning stage and has been shown to lead nonresidential construction spending by one year.
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This chart shows the Dodge Momentum Index since 2002. In April, the index was 173.9, up from 164.0 the previous month.
According to Dodge, the index “predicts nonresidential construction spending by one year. The index suggests a slowdown in 2024.
Commercial construction is typically a lagging economic indicator.