The Dodge Momentum Index (DMI) jumped 7 percent in May to 176.2 (2000=100), up from the 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%.
May’s increase in the Dodge Momentum Index pushed the level of planning above the most recent cyclical high in November 2021. During the month of May, commercial planning was led higher by an increase in office and hotel projects. Institutional planning was boosted by an increase in education and healthcare projects entering planning. On a year-over-year basis, 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 one year ago.
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 (a large computing building) in Corsicana, Texas, and the $300 million Gun Lake Hotel and Resort in Wayland, Mich. 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, Colo.
Despite higher interest rates and fear of recession, 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.