U.S. Construction Industry Jump Starts with Third Consecutive Month of Growth

PHOENIX, Ariz. — According to Rider Levett Bucknall, findings in its newly released Third Quarter 2015 USA Construction Cost Report, the U.S. construction industry continued to experience an upward trend last quarter, with three consecutive months of growth. The report also states cost escalation in Honolulu, Hawaii in the second quarter hit 2.76 percent (11 percent annualized) leading its construction costs to eclipse those of New York City and making it the most expensive city to build in the USA.

Rider Levett Bucknall’s research indicates that national activity for construction put-in-place jumped by nearly 12 percent between the third quarter 2014 and the second quarter 2015; the unemployment rate for construction laborers decreased during the same period; and cost escalation nationally sat at 3.56 percent for the past year.

“Three consecutive months of growth in the AIA’s Architectural Billing Index and a 12 percent increase in construction activity is an excellent sign that the U.S. construction industry is finally gaining some momentum,” stated Julian Anderson, president of Rider Levett Bucknall North America. “We anticipate steady growth through the rest of 2015 and into the first quarter 2016, especially if the Fed raises interest rates in the last quarter of the year.”

To support its findings, the firm cited the American Institute of Architects” Architectural Billing Index, which stated that July’s ABI was 55.7, up from April’s score of 48.8, marking “the third consecutive month of growth, breaking the recent ABI pattern of two months of progress after two months of contractions.” The report also observed that as GDP increased at a robust 3.7 percent, unemployment was steady at 5.5 percent, and general economy-wide inflation sat at 1.06 percent (4.24 percent annualized), despite the U.S. Federal Reserve Bank’s decision to keep interest rates unchanged. The national construction unemployment rate fell to 6.3 percent, which was still higher than the general rate of unemployment.

According to the U.S. Department of Commerce, construction put-in-place during June 2015 was estimated at a seasonally adjusted annual rate of $1,064.6 billion, which is 0.1 percent above the revised May estimate of $1,063.5 billion. The June 2015 figure is 12 percent above the June 2014 estimate of $950.3 billion. The value of construction for the first six months of this year was $482.7 billion, 8 percent above the same period in 2014.

Rider Levett Bucknall tracks construction costs in 12 major U.S. cities. From April 1 and July 1, the national average increase in construction cost was approximately 1.15 percent. Honolulu again experienced the greatest increase showing inflation of almost 2.8 percent for the period. All other North American locations experienced inflation between 0.8 percent and 1.25 percent for the quarter.