Wednesday, November 09, 2016

Leading Index for Commercial Real Estate "moves higher" in October

by Bill McBride on 11/09/2016 12:21:00 PM

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

From Dodge Data & Analytics: Dodge Momentum Index Moves Higher in October

The Dodge Momentum Index grew 4.1% in October to 133.6 from its revised September reading of 128.3 (2000=100). 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. October’s gain nearly reversed the loss in September, and returns the Momentum Index to the rising trend that began earlier in the year. The commercial component of the Momentum Index rose 6.1% in October, and is 20% above last year. This suggests that despite being in a more mature phase of the building cycle, commercial construction has room for further growth in the coming months. The institutional component of the Momentum Index increased 1.4% in the month, and is now 10% higher than one year ago.
emphasis added
Dodge Momentum Index Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 133.6 in October, up from 128.3 in September.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". In general, this suggests further increases in CRE spending over the next year.