Labor and materials are arguably the two most critical ingredients of any construction project. No buildings transform skylines, no bridges span rivers and no homes rise from foundations without them. That’s why pricing of these two production components can mean cost-cutting is in store for other areas of the job budget or, given steep-enough increases, the scuttling of the project altogether.
The most recent numbers from the Bureau of Labor Statistics revealed a 4.8% rise in material prices between February 2016 and February 2017. Ken Simonson, chief economist for the Associated General Contractors of America, said this «sharp U-turn» came after declines of 3.5% in 2015 and 2.7% in 2016.
Those declining prices are quickly becoming a distant memory for some segments of the materials sector. Most of the overall uptick in prices can be attributed to an increase in demand driven by ramped-up building activity, but the industry can also look to the factors of energy prices, a more stable global market and tariffs, which Simonson said were tacked onto certain types of foreign steel after protests by U.S. steel manufacturers.
One of the most common concerns industry experts cited for this year has been the rising cost of doing business due to material cost increases. So how has the turnaround in material prices affected construction so far, and what can the construction industry expect in the coming months and years?
The most recent numbers from the Bureau of Labor Statistics revealed a 4.8% rise in material prices between February 2016 and February 2017. Ken Simonson, chief economist for the Associated General Contractors of America, said this «sharp U-turn» came after declines of 3.5% in 2015 and 2.7% in 2016.
Those declining prices are quickly becoming a distant memory for some segments of the materials sector. Most of the overall uptick in prices can be attributed to an increase in demand driven by ramped-up building activity, but the industry can also look to the factors of energy prices, a more stable global market and tariffs, which Simonson said were tacked onto certain types of foreign steel after protests by U.S. steel manufacturers.
One of the most common concerns industry experts cited for this year has been the rising cost of doing business due to material cost increases. So how has the turnaround in material prices affected construction so far, and what can the construction industry expect in the coming months and years?