Economy

Dodge Momentum Declines in August on Tighter Lending

Written by David Schollaert

September 8, 2023

The Dodge Momentum Index (DMI) moved lower in August, driven by a slowdown in planning from tighter lending standards, according to the latest data from the Dodge Construction Network (DCN).

The DMI dropped 6.5% to 178 in August from July’s revised reading, but it was still 4% higher than the same time last year.

“Overall activity remains above historical norms, but weaker market fundamentals continue to undermine planning growth,” said Sarah Martin, associate director of forecasting for Dodge Construction Network. “It’s likely that the full year of tightening lending standards and high-interest rates has begun to affect institutional planning, which has otherwise been resistant to these market headwinds. Also, planning in the sector continues to revert from the strong spike in activity back in May.”

The fourth quarter will be highlighted by further constraining for both commercial and institutional planning, Martin noted.

The two largest institutional segments, healthcare, and education, slowed down in August, while stronger hotel planning offset weaker office activity, causing a milder regression in the commercial segment over August, the report said.

Month over month, the commercial component of the DMI fell 1.6%, while the institutional component fell 14.8%. However, year over year the commercial component was 3% higher, and the institutional component was up 7%.

Dodge is the leading index for commercial real estate, using the data of planned nonresidential building projects to track spending in the important steel consuming sector for the next 12 months. An interactive history of the DMI is available on our website.

David Schollaert

David Schollaert is a senior analyst for Steel Market Update. David joined SMU after more than a decade in the metals and mining industry in a myriad of different roles. Much of his early experience and expertise were within the coverage and analysis of steel-making raw materials and served previously as senior editor of the CRU Prices Service. Most recently, however, before his return to market analysis, David held roles as a metals buyer and an operations manager for raw material suppliers. Based in CRU’s Pittsburgh office, David can be reached at david@steelmarketupdate.com or 724-720-1008.

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