The latest Dodge Momentum Index (DMI), released by the Dodge Construction Network (DCN), indicates a possible cooling trend in nonresidential construction planning.
In March, the DMI experienced a significant 6.9% drop, driven by decreased activity in both commercial and institutional sectors. This monthly decline raises questions about the near-term outlook for construction spending.
Specifically, commercial planning experienced a 7.8% decrease, while institutional planning fell by 5%. Sarah Martin, Associate Director of Forecasting at DCN, attributes this downturn to “increased uncertainty around material prices and fiscal policies,” suggesting that these factors may be impacting planning decisions.
Despite the monthly dip, the year-over-year comparison remains positive, with the DMI still up a robust 30% compared to March 2024. This growth, however, requires closer examination.
The DMI serves as a leading indicator of construction spending for nonresidential buildings, typically anticipating activity by approximately a year. Therefore, the March decline suggests a potential moderation in construction spending in mid-2026.
Drilling Down into the Sectors:
The commercial sector saw weaker planning activity in key segments like warehouses, data centers, and retail stores. However, positive movement was observed in hotel and office planning, indicating some areas of continued strength.
On the institutional side, the slowdown was broad-based, affecting education, healthcare, and government building projects.
The Data Center Factor:
It’s crucial to acknowledge the significant impact of data center projects on the DMI. DCN analysis reveals that without the inclusion of data center projects initiated between 2023 and 2025, the commercial planning sector would only be up 4% year-over-year, and the overall DMI would show an increase of just 12%. This highlights the outsized influence these projects have exerted on the index. While data center planning decelerated in March, activity remains at elevated levels.
Notable Projects Entering Planning:
Despite the overall decline, several large-scale projects entered the planning phase in March. These included:
- Commercial:
- $400 million Logistics Land Investments Data Center in Bessemer, Alabama
- $340 million expansion to the Ontario Convention Center and Hotel in Ontario, California
- $300 million Project Cinco Data Center (300 MW) in Natalia, Texas
- Institutional:
- $500 million ambulatory care building at Scripps San Marcos Medical Center
- $165 million Roanoke High School in Roanoke, Virginia
- $135 million Milken Community School expansion in Los Angeles
While the March DMI data warrants attention, it’s important to maintain a balanced perspective. The year-over-year figures remain strong, suggesting continued construction activity. However, the weakening planning activity and the impact of data centers on the index signal a need for vigilance. Industry stakeholders should closely monitor future DMI releases and other economic indicators to gain a more comprehensive understanding of the construction landscape and to adjust their strategies accordingly. The impact of material price volatility and fiscal policy uncertainty will likely continue to shape planning decisions in the coming months.
Source: USGlass with additional information added by GlassBalkan
