Dodge Momentum Index moderated in May, slipping 1.2 percent from April, according to McGraw-Hill Construction, a division of The McGraw-Hill Companies. The Index is a measure of first-reported nonresidential building projects at the planning stage, which have been shown to lead construction spending for nonresidential buildings by a full year. The Index now resides at 93.6 (2000=100) compared to the prior month’s 94.8.
The May decrease follows a 1.0 percent gain in April when the Index hit its highest level since August 2010. The moderation in the May Index was in line with the unsettled economic environment and the recent downward revisions to both gross domestic product and employment. In recent months, the Index had been showing a gradual upward trend – after hitting bottom in July 2011 at 77.1, the Index had risen in all but two months through April.
May’s softening was the result of a divergent pattern for the two major segments of the Dodge Momentum Index, as a 1.5 percent gain for institutional building was outweighed by a 4 percent decline for commercial building. The institutional building portion of the Index was aided by several large education projects that entered the planning pipeline last month including a $300 million renovation to New York Public Library’s Fifth Avenue flagship building. Given current tight fiscal conditions within state and local governments, however, the recent trend for institutional building projects at the planning stage has been flat-to-down.
The commercial building portion of the Index pulled back in May after showing gains in recent months. A decline in new planning projects for office construction was responsible, only partially offset by a greater volume of planning projects for stores and warehouses.