- Turner Construction Company’s Fourth Quarter 2016 Turner Building Cost Index reading of 1006 reflects a 1.11% increase from the third quarter and a 4.9% uptick year over year.
- Raw materials prices have also risen since last year, and fabricated materials have seen quarter-over-quarter growth, but Turner said skilled labor shortages have been the primary source of cost increases.
- Turner bases its quarterly index reports on national figures of labor rates, productivity, material prices and the construction industry’s competitive environment.
Turner said it expects the construction industry to continue growing nationally, with the biggest expansions projected in the West and Southeast. As the year progresses, the company said industry attention on the availability of skilled labor will intensify. Dodge Data & Analytics is in agreement regarding the direction of the industry and projected a 5% increase in the value of construction starts in 2017.
The latest jobs report revealed a 3,000-job decline for the construction industry in December. The residential sector added 9,800 positions, but the nonresidential sector erased those gains with a 13,400 loss. When those numbers are combined with the fastest wage growth since 2009 and strong construction spending last month, it results in construction companies having even more difficulty finding enough skilled workers.
As for the Associated General Contractors of America’s long-term plan to alleviate the stress on the labor market, it still advocates for increase focus and spending on career technical training to help add to the worker pipeline and make up for the expected wave of retiring construction personnel in the coming years.
The construction worker shortage is not limited to the U.S., however. Israel and China recently announced a deal to send 20,000 Chinese workers to the Middle East country over the next few years in an effort to support the government’s ambitious residential building program.