This story was originally published in Builder.
Construction costs rose again in November, according to IHS Markit and the Procurement Executives Group (PEG).
Current subcontractor labor prices rose at a fast pace: the index figure came in at 58.5, the highest reading since December 2014. Regionally, costs rose in all four regions of the United States. In Canada, the results were mixed; labor costs fell once again in eastern Canada but they were flat in western Canada.
“Subcontractor rates continued to accelerate over November and expectations for future increases reached a five-year high,” says Emily Crowley, principal economist - pricing and purchasing, IHS Markit. “Tightening labor market conditions combined with an uptick in activity are driving expectations of future rate increases. Currently the U.S. South and West are having the most trouble finding workers leading to stronger wage escalation, whereas the end of major projects in Eastern Canada are keeping pressure off of wages in that region.”
The six-month headline expectations index recorded another month of increasing prices. The index figure moved up from 65.9 in October to 71.3 this month. The materials/equipment index stayed positive at 67.9, a slight uptick from October’s 67.4. Similar to current material/equipment prices, expectations for future price increases were widespread, with index figures for every component coming in strongly above neutral. Price expectations for subcontractor labor came in at 79.3 in November. Labor costs are expected to rise in all regions of the United States and Canada.
To read more stories like this, visit Builder.
