Wells Fargo Reports: Dodge Momentum Index Reverses Weakness in May

The Dodge Momentum Index gained 4.0 percent in May following April’s decline. Reaching a post-recession high, the commercial sector posted a solid monthly gain and institutional rebounded during the month.

May DMI Advances Following Weak April

• After April’s retreat of 5.1 percent to 133.7, May’s DMI print bounced back a solid 4.0 percent to 139.1. On a year-over-year basis, the index is up 20.8 percent. The prior month’s decline caused some concern, but the rebound in May eases worries and is consistent with moderate construction growth ahead. Over the month, six $100 million plus projects entered planning, including a $245 million office tower in New Jersey and a $100 million detention center in Texas, in the commercial and institutional sectors, respectively.

Commercial Planning Posts Second Straight Gain

• The commercial component ballooned to 152.9 in May, the highest level since November 2008, for a 19.4 percent yearly gain. The gain suggests continued construction activity in the sector, despite slowing occupancy and asking rent growth.
• On the institutional side, May’s 2.5 percent gain to 122.1 is a welcome reading given April’s 12.0 percent drop. Over the year, the sector is up 23.2 percent. That said, the run of double-digit yearly gains may be coming to an end, as planning activity jumped beginning in June 2016 and has remained elevated.