Construction Cost Escalation Continues to be Fueled by Volatility in Material and Labor Markets

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Turner Construction Company’s First Quarter Building Cost Index—which measures costs in the non-residential building construction market in the United States—had increased to the value of 1255. This represents a 2.03% quarterly increase from the fourth quarter 2021 and a 7.08% yearly increase from the first quarter 2021. “Overall Supply Chain stability and the ‘return-to-normal’ state has not yet been established. Some key materials continue to be in short supply due to supply chain disruptions in manufacturing and computer chip shortages. Higher transportation costs are due to the rising price of gasoline and diesel fuels,” said Attilio Rivetti, the Turner vice … Read more

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Equipment Leasing and Finance Association’s Survey of Economic Activity: Monthly Leasing and Finance Index

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The Equipment Leasing and Finance Association’s Monthly Leasing and Finance Index showed its overall new business volume for March was $10.6 billion, up 14% year-over-year from new business volume in March 2021. Volume was up 49% month-to-month from $7.1 billion in February. Year-to-date, cumulative new business volume was up 5% compared to 2021. Receivables over 30 days were 1.5%, down from 1.7% the previous month and down from 1.9% in the same period in 2021. Charge-offs were 0.10%, up from 0.09% the previous month and down from 0.43% in the year-earlier period. Credit approvals totaled 78.3%, up from 78.2% in … Read more

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Input Prices for Nonresidential Construction Climb 21% between March 2021, March 2022

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Prices of materials and services used in new nonresidential construction jumped more than 21% from March 2021 to March 2022, according to an analysis by the Associated General Contractors of America of government data. “Construction firms have been burdened with cost increases of 20% per year or more since early 2021,” said Ken Simonson, the association’s chief economist. “Since contractors can seldom pass along increases on projects that are underway, these extreme price hikes threaten the viability of many firms. Unfortunately, the continuing war in Ukraine is likely to keep input costs elevated for many more months, if not longer.” … Read more

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Construction Input Prices Up 3% in March, 24% Year Over Year

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Construction input prices rose 2.9% in March, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices expanded 2.8% for the month. Construction input prices are up 24.4% from a year ago and 39.1% from February 2020, while nonresidential construction input prices are 25% and 39.2% higher. Natural gas prices are up more than 200% since the start of the pandemic, while crude petroleum prices are up more than 100% over that span. “Despite recent growth in the nation’s labor force participation rate, contractors continue to contend … Read more

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Construction Backlog Up, Contractor Confidence Down in March   

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Associated Builders and Contractors’ latest Construction Backlog Indicator has increased to 8.3 months in March, according to an ABC member survey. The reading is up .5 months from March 2021. ABC’s Construction Confidence Index readings for sales, profit margins and staffing levels declined in March. All three indices remain above the threshold of 50, however, indicating expectations of growth over the next six months. “Demand for construction services remains strong despite sky-high materials prices, skills shortages and elevated bids,” said ABC Chief Economist Anirban Basu. “ABC contractors indicate that demand will remain strong, with 65% of contractors expecting sales to … Read more

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