Leading Index for Commercial Real Estate "Recovers" in October

by Bill McBride on 11/08/2017 11:58:00 AM

Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing.

From Dodge Data Analytics: Dodge Momentum Index Recovers in October

The Dodge Momentum Index rose in October, climbing 13.2% to 130.9 (2000=100) from the revised September reading of 115.6. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. The move higher in October nearly reversed the erosion of the past four months (including September’s 7.9% decline), with October posting healthy gains in both sectors. From September to October the commercial portion of the Momentum Index advanced 16.8%, while the institutional portion grew 8.3%. On a year-over-year basis, the Momentum Index is now 6.1% higher, with the commercial portion up 5.5% and the institutional portion up 6.9%. October’s increase supports the belief that building activity has further room to grow during this cycle. While month-to-month activity could continue to be volatile, there are enough projects in the pipeline to sustain growth into 2018.
emphasis added

Dodge Momentum Index Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 130.9 in October, up from 115.6 in September.

The index is up 6.1% year-over-year.

According to Dodge, this index leads “construction spending for nonresidential buildings by a full year”. This suggests further growth into 2018.