Construction costs continue to rise

Bob Galinsky | August 8, 2018


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Non-residential construction costs continue to increase in the U.S. market, a reflection of increased activity in the sector. So the economy is good, and that's the good news, but it's so busy that prices for raw materials and labor keep going up, and that's not such good news.

According to the Turner Cost Index, non-residential construction costs for Q2 2018 were 5.63% higher than for the previous year. Labor costs are certainly a large part of the increase. The unemployment rate for construction was 3.4% in July, the lowest since data started being collected on this sector in 2000. There were 263,000 job openings in the construction sector in July 2018, again the highest number since data began being collected. The industry suffers particularly from a shortage of younger workers.

Material costs have also gone up. Due primarily to tariffs being imposed by the U.S. government on aluminum and steel imports, the producer price index for construction materials has increased by over 9% over the past 12 months.

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