- The most recent Mortenson Construction Cost Index report for nonresidential construction activity in six U.S. metros predicts a 3% to 4.5% increase in building costs this year.
- Similar to last year's report, Mortenson said nonresidential employment was exhibiting signs of healthy growth despite the lackluster performance of construction industry employment in general.
- Mortenson also found wide variations in prices for the 30 building component categories the company tracks, with some recording no movement in the fourth quarter of 2016 and others reporting increases of up to 8.4%.
Mortenson, one of the nation's largest construction companies, tracks construction price activity and employment in six U.S. metro areas in its Cost Index report — Chicago, Denver, Minneapolis, Milwaukee, Phoenix and Seattle. The company calculates its quarterly index by pricing representative, nonresidential construction projects.
An Associated Builders and Contractors analysis of BLS data in January found that material prices rose 0.4% in December after falling back in November. That slight upward movement was enough to achieve a 2.1%, year-over-year bump, the largest yearly increase in 30 months.
A recent report from Moody's indicated that construction activity is behind material price increases in general, but with the addition of higher wages necessary to keep employees in an environment of a skilled labor shortage, the burden is growing greater for contractors. These added costs caused the ABC to predict slower growth for the nonresidential sector in 2017.
Material suppliers and other related construction businesses are all poised to benefit from a $1 trillion infrastructure plan backed by the new Trump administration. Many of these companies got a taste of what the future could bring when, after the election, they saw their stock prices increase on the hopes that the hype around infrastructure spending would come to pass. Initial indications, however, are that it's going to take the new administration time to work out the differences between Republicans and Democrats in the difficult path to passing an infrastructure funding law.