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Leading Index for Commercial Real Estate Increases in July

Summary:
Thursday:• At 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for 220 thousand initial claims, up from 218 thousand the previous week.• Also at 8:30 AM, The Producer Price Index for July from the BLS. The consensus is a 0.3% increase in PPI, and a 0.3% increase in core PPI.Note: This index is possibly a leading indicator for new non-residential Commercial Real Estate (CRE) investment, except manufacturing. From Dodge Data Analytics: Dodge Momentum Index Increases in JulyThe Dodge Momentum Index moved 1.4% higher in July to 169.8 (2000=100) from the revised June reading of 167.3. 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

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Thursday:
• At 8:30 AM, The initial weekly unemployment claims report will be released.  The consensus is for 220 thousand initial claims, up from 218 thousand the previous week.

• Also at 8:30 AM, The Producer Price Index for July from the BLS. The consensus is a 0.3% increase in PPI, and a 0.3% increase in core PPI.

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

From Dodge Data Analytics: Dodge Momentum Index Increases in July
The Dodge Momentum Index moved 1.4% higher in July to 169.8 (2000=100) from the revised June reading of 167.3. 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. In July, the commercial component of the Momentum Index grew by 3.3%, while the institutional component fell 1.5%. The headline Momentum Index has risen steadily since its slippage during the third quarter of 2017. Stronger economic growth and the support from still-healthy real estate market fundamentals (occupancies and rents) have contributed to these gains for construction projects at the planning stage, which have yet to be restrained by the uncertainty arising from higher material costs and higher interest rates.
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Leading Index for Commercial Real Estate Increases in July Click on graph for larger image.

This graph shows the Dodge Momentum Index since 2002. The index was at 169.8 in July, up from 167.3 in June.

According to Dodge, this index leads "construction spending for nonresidential buildings by a full year". This suggests further growth into 2019.
Bill McBride
A full time blogger, Mr. McBride retired as a senior executive from a small public company in the '90s. Mr. McBride holds an MBA from the University of California, Irvine, and has a background in management, finance and economics.

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