Dodge Momentum Index Suggests Modest Construction Recovery in Q3

The Dodge Momentum Index was nearly unchanged at 129.2 in May compared to 129.4 in April. The commercial component of the index rose 1.0 percent while the institutional component dropped 1.9 percent. The Index is a significant predictor of future construction. The monthly index is a measure of the first report for nonresidential building projects in planning, which has been shown to lead construction spending by a full year.

“The resilience of the Momentum Index over the last two months has been remarkable in the face of the COVID-19 crisis and resulting economic recession,” said Dodge Data & Analytics. “With May’s reading, the Momentum Index is down 17 percent from its most recent peak in July 2018. During the Great Recession, by contrast, the peak-to-trough decline was 62 percent. While the Momentum Index may move lower in the future, its present level continues to suggest that there are enough projects entering planning to allow construction to begin a modest recovery in the third quarter.”