The Dodge Construction Network announced that its Dodge Momentum Index (DMI) jumped 7% in May to 176.2, up from the revised April reading of 165.2. In May, the institutional component of the Momentum Index rose 9%, and the commercial component increased 6%.
The Momentum Index 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.
Dodge reports that May’s increase in the DMI pushed the level of planning above the most recent cyclical high in November 2021. During the month of May, the report shows 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% higher than in May 2021. The commercial component was 24% higher, and the institutional component was 8% higher than one year ago.
The report shows 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.
Higher interest rates and fear of recession have not stymied nonresidential building projects, which the DMI reports continue to steadily enter the planning cycle. Higher prices and labor shortages may result in projects reaching groundbreaking later in 2022 or early 2023, but the report shows they provide hope that the construction sector will be able to withstand a potential economic slowdown fed by higher interest rates.