The current headline IHS Markit PEG Engineering and Construction Cost Index registered 54.5 in December, marketing a rise in construction costs for the 38th consecutive month. The materials and equipment sub-index registered 54.1, while the subcontractor labor sub-index registered 55.4, indicating price growth across both sectors.
Survey respondents noted rising prices for ten of the 12 materials and equipment components in the index. A majority reported higher prices for copper based cable and wire – the first recorded rise since August – while carbon steel pipe and fabricated structural steel were the only two components to see prices fall.
“Sentiment has improved in copper markets primarily on hopes that U.S.- China trade negotiations will yield further progress,” says John Mothersole, director at IHS Markit. “Higher copper prices are also supported by underlying fundamentals, which remain tight due to sluggish production growth over the past year.”
The six-month headline expectations for future construction costs index registered 71.9, up slightly from November, indicating increasing prices for the 40th consecutive month. The six-month materials and equipment expectations index was 72.4, up from 71.4 in November, and expectations for subcontractor labor fell to 70.2 in December. In the survey comments, respondents noted shortages of welders, pipe fitters and truck drivers.
