Dodge Momentum Index rebounds on surge of data center planning

The DMI tracks the value of nonresidential construction projects entering the planning stages. It typically leads construction spending by about 12 months.

The index had been flat for much of the second half of last year. It then steadily began falling, hitting a two-year low in March, before bouncing back in April.

The Commercial Building component of the index surged 12.6% month on month (m/m) and 6% year on year to a 12-month high. The jump was primarily due to “a deluge of data center projects that entered the planning stage” in April, according to Sarah Martin, DCN’s associate director of forecasting.

“Outsized demand to build Cloud and AI infrastructure is supporting above-average activity in the sector,” she commented.

At the same time, DCN noted steady warehouse planning but slower momentum in traditional office and hotel projects.

Meanwhile, the index’s institutional building component fell 6.3% m/m and 15% y/y to 118.5 in April, as planning for education and healthcare pulled back again. The last time an institutional component this low was recorded was in August 2021.

DCN pointed to uncertain interest rates and lending standards as reasons for slower growth in other categories. “If interest rates begin to tick down in the latter half of 2024, more substantive growth in nonresidential planning activity should follow,” Martin noted.