Dodge Momentum Index recovers lost ground in May
- The Dodge Momentum Index resumed its positive direction in May, up 4% to 139.1 from a downward-revised April reading of 133.7, according to Dodge Data & Analytics.
- The institutional sector rallied in May with a 2.9% gain, modestly recovering some lost ground from an April dip of 12%. The commercial segment saw an increase of 4.8% last month, which put it at an eight-and-a-half-year high.
- Six commercial and institutional projects valued at more than $100 million entered the planning stages in May. Those included a $245 million Camden Partners office high-rise in Camden, NJ, the $140 million first phase of the Gateway of the Pacific office project in San Francisco and a $100 million detention facility in Conroe, TX.
With May's commercial recovery, Dodge economists predict the segment will continue to grow in the coming months, though at a slower pace and in the face of a cooldown in occupancies and rents. And with the institutional segment's only declines posted in April, analysts expect it to stay strong as the year progresses.
April's 5.1% slip marked the end of a six-month streak of growth for the Index, though it still boasted a first-quarter bump of 20% compared to the first quarter of 2016 — roughly equivalent to where the Index stood in May. The Momentum Index serves as a forward-looking indicator and predicts construction spending for a year in the future.
In current construction activity, Dodge reported that April construction starts fell 13% from March to a seasonally adjusted annual rate of $647.8 billion, breaking a three-month streak of gains.
The nonbuilding category, which had led gains the month before, tumbled 39%, following a lag in large projects. Commercial starts were up 6% but couldn't stop nonresidential from falling 1%. Meanwhile, weakness in both multifamily and single-family starts forced the residential category down 5%.
ConstructConnect also reported disappointing starts activity for April, with an overall decline of 7.2% from March. Industrial fell a whopping 72% and commercial decreased 35.4%, pulling the figures for total starts down despite positive starts in the heavy engineering (10.4%) and institutional (27.9%) sectors. According to ConstructConnect, the value of year-over-year starts was down 22.8% from April 2016.
- Dodge Data & Analytics Dodge Momentum Index Resumes Growth in May
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