Dive Brief:

• The Dodge Momentum Index increased 2.4% in May to 119.4, a bump up from the upwardly adjusted April figure of 116.6, due largely to a 6.5% surge in commercial project planning.
• This second consecutive monthly rise in commercial project planning helped the Index overcome a 3.4% May decrease in institutional planning, which is part of a 1.3% year-over-year dip in that category from robust activity in the fourth quarter of 2015 and the first quarter of this year.
• Overall, the Index is up 3.6% year over year, which indicates continued growth in construction despite stricter commercial lending policies. In addition, the commercial category — now at its highest level since September of last year — is showing signs of a recovery from its stumble during Q4 2015's "financial market instability."

Dive Insight:

The Momentum Index is a monthly measure of initial reports of nonresidential building projects in the planning stages, which usually lead nonresidential construction spending by one year.

In May, six projects of more than $100 million in value entered the planning stages, according to Dodge. Among the large commercial projects entering planning in May were two large Staten Island, NY, warehouses — one valued at $304 million and the other at $141 million. Entering the planning stage in the institutional sector was a $252 million neuroscience building at Stanford University in Palo Alto, CA.

Last week, real estate company JLL reported that retail building — primarily renovations — was the driving force behind nonresidential construction's 24.4% increase in the first quarter of 2016. However, the company also said it had already started to see a decline in office construction, largely due to the economic slump in China and disappointing GDP reports, both of which are creating an uncertain environment for investors.

In the most recent Commerce Department report, overall construction spending fell 1.8% in April, and the nonresidential sector was no exception, slipping 1.5%. Regarding the institutional sector, a Dodge Data & Analytics report last month found that institutional starts in April were higher than expected in what could be, given its latest low momentum score, the remnants of that category's previous level of activity.