The May read on nonresidential planning came in stronger than April under the surface. Headline Dodge Momentum Index growth was 4%, but strip out data centers and the index rose 7%. That’s the cleaner picture of the forward pipeline. Institutional projects, not commercial, are doing most of the work right now.
The DMI tracks the value of nonresidential building projects entering planning, and it leads actual construction spending by about a year. So today’s 4% bump points to firmer activity in mid-2027, not later this quarter. Even so, the May read matters because it’s the second consecutive month of acceleration after a soft start to the year.
Institutional is the story
Healthcare, K-12 and higher-education planning all climbed in May. Dodge cited an unusually heavy month of hospital and medical office-building submittals, plus a thick file of community college and university capital projects. The institutional side of the index ran roughly twice the pace of the commercial side.
Part of that is timing. State capital budgets, especially in Florida, Texas, and North Carolina, opened up fresh dollars in early Q2 that flow first into design contracts and second into construction starts. Part of it is the federal IIJA backstop still pulling water-related institutional work through. And part of it is hospital systems finally moving on pent-up demand backlogs that had been deferred through 2023 and 2024 as bond rates climbed.
The data center base rate normalizes
April’s commercial DMI was carried by an outsized run of hyperscale data-center submittals. May returned to a more typical baseline, which is why the headline number looks softer than the underlying read. Without data centers, the commercial portion of the DMI would have improved 5% and the all-in DMI would have grown 7%.
Warehouses and hotels paced the rest of commercial. Office and retail were flat. That last point is worth holding onto. Office planning has been flat or down for the better part of two years now, even as occupiers cycle through hybrid-work decisions. The May read doesn’t change that trajectory.
What to watch in June
Three things. Whether institutional growth holds, or whether it was a one-month flush from state Q2 capital openings. Whether data centers come back in June with another surge, which would signal that hyperscalers are batching submittals rather than slowing them. And whether commercial ex-data-center growth, currently the cleanest read on private-sector demand, holds above 5%.
The Architecture Billings Index landed at 48.3 in April, still below the 50 line that separates expansion from contraction. The DMI’s June reading is the next confirmation that the soft ABI in April was a lag rather than a turn. Source: Dodge Construction Network’s May DMI release.