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Dive brief:
- Turner’s construction cost index rose 5.2% year-on-year in the second quarter, providing further evidence that construction costs are rising annually, although the monthly figures offered a momentary reprieve.
- Construction cost benchmark for New York City-based Turner Construction, the industry’s top contractor by revenue, rose 1.4% from the first quarter as high growth sectors drove demand for both labor and materials, according to a July 24 press release.
- “Demand remains strongest in data centers, semiconductors, advanced manufacturing and mission-critical facilities, particularly in the Midwest and Southeast,” said Attilio Rivetti, Turner vice president responsible for compiling the index, in the statement. “The industry’s biggest challenge remains the availability of skilled mechanical and electrical labor.”
Diving knowledge:
Monthly costs have recently increased. In June, non-residential input costs decreased by 1.1% month after month, according to the latest data from the US Bureau of Labor Statistics. But that drop came after a 2.6% month-on-month rise in May, a jump that helped spur the fastest annual increase since the pandemic.
These fluctuating results mean that contractors must approach potential project estimates with even more scrutiny, as global uncertainty and shifting tariff policies at home create an ever-changing target for input prices. President Donald Trump announced last week a 50% tariff on key Canadian imports will enter into force on August 19.
Then Wednesday, the The Federal Reserve kept interest rates steady; however, three members disagreed, citing that inflation has remained above 2% for more than five years, CNBC reported.
“Going forward, owners and contractors will be closely watching material costs, pricing policy and supply chain conditions,” Rivetti said in Turner’s statement. “Uncertainty in these areas reinforces the importance of disciplined planning, early procurement and proactive risk management as projects move forward.”
Turner has tracked his own construction cost forecast for more than 80 years based on the national conditions he sees on his own projects, including labor rates and productivity, material prices and competitive market conditions. For these reasons, the contractor says it does not necessarily conform to other published cost indexes.
