- The Turner Building Cost Index, a measure of construction materials and labor prices across the industry that the country’s largest contractor has maintained for more than 80 years, continued its upward climb during the second quarter of 2023, rising 1.2%.
- Increasing labor costs across several markets primarily drove the change, even as lead times for some material categories have improved. For the year, the index notched a 6.4% increase from the second quarter of 2022.
- “Certain geographic regions are experiencing robust markets as large industrial, data center and energy-related projects move forward,” said Attilio Rivetti, Turner’s vice president responsible for compiling the index. “These regions are experiencing above-average increases in wage rates.”
While the overall trajectory of the index continued to climb, the rate of increase has slowed over the last four quarters, as the industry and workers have started recovering from the impacts of the COVID-19 pandemic.
For example, in the third quarter of 2022, Turner’s Cost Index rose at 2.2%, but it has risen less than that in each of the subsequent quarters. And although the rolling 12-month gain was still higher than pre-pandemic levels, it was also lower than the 8% increase the index notched for the full 2022 calendar year.
Part of that positive development for pricing has come as supply chains have gotten closer to normal status post-COVID, while contractors and subs have also pivoted to collaborating earlier on projects to overcome any known shortages. Offering job perks for workers has helped, too.
“Promoting job opportunities in growing markets and offering attractive work environments for the workforce alleviates some of the pressure in a tight labor market,” Rivetti said. “Early coordination and participation of trade contractors and suppliers serve to mitigate the impact of long lead times for equipment on construction schedules.”