The Dodge momentum index three month moving average (3MMA) rolled back up 2.6 points or 1.8% in April. The index has advanced in five of the previous six months. The index predicts non-residential construction activity approximately 12 months out.
The 3MMA institutional sub-index fell 1.6% after reaching its all-time high of 138.3 in March. The 3MMA commercial sub-index fell 2.2% in April, however the 12MMA trend-line remains positive. Despite April’s decline, there continued to be a strong upward trend for the momentum index suggesting that construction activity still has further room to grow in 2017. The momentum index is much stronger now compared to the years 2014 and 2015. During this 24 month period the index gained only 4.0%, while over the past 12 months the index has gained 14.8%.
Figure 1 presents the Dodge momentum index and its 12 month moving average (12MMA) from 2012 to present. On this basis, the index has been trending higher since mid-2015, a very encouraging sign for future growth in non-residential construction. Figure 2 breaks out the commercial sub-index and its 12MMA. The commercial sub-index has rolled back after a four month climb, yet shows a steady advance when viewed on a 12MMA basis. Figure 3 shows the institutional sub-index and its 12MMA. It shows a lot more volatility than the private sector dominated commercial segment. Its 12MMA remains positive.
In April, six projects entered planning each with a value that exceeded $100 million. For the commercial building sector, the leading projects were a $275 million commercial building project in Brooklyn, NY and the $110 million Optimus Logistics Center in Perris, CA. The leading institutional projects were the $200 million Kennedy Health Patient Tower in Turnersville, NJ and the $110 million Highline High School replacement in Burien, WA.
At Gerdau we regularly monitor the strong relationship established between the Dodge Momentum Index and actual non-residential construction spending one here hence. This is a valuable leading indicator for planning purposes for construction industry professionals including you our valued customers.