The mainland U.S. construction industry continued its sluggish growth during the last quarter, with no signs of gaining momentum.
According to Rider Levett Bucknall, international property and construction consultants, activity for construction put-in-place increased just 1.7 percent above June 2014 figures while the unemployment rate for construction laborers increased during the same period, falling to 7.5 percent in April 2015.
The firm reported its findings in its newly released Second Quarter 2015 USA Construction Cost Report.
Rider Levett Bucknall’s research indicates that U.S. construction cost inflation continued to rise in the second quarter of 2015 at an annualized rate of 5.5 poercent.
In contrast, the U.S. Bureau of Labor Statistics’ Consumer Price Index (CPI) for all urban consumers fell 0.2 percent and ENR’s Building Cost Index rose only 2.7 percent in the same period.
The firm cited additional industry indices to support its findings, including the American Institute of Architects’ (AIA) Architectural Billing Index (ABI), which stated that March’s ABI was a lackluster 51.7 and April’s number fell to 48.8, reflecting a decrease in demand for design services, especially in the Northeast.
It reported that the The National Association of Home Builders’ Confidence Index fell two points to 54 in May, the fourth fall in five months, and The Conference Board’s Consumer Confidence Index rose from 94.3 (April) to 95.4 (May), which is still below the March figure of 101.4.
On the national labor front, employers added 223,000 jobs in April — up from a disappointing 85,000 in March — while the general unemployment rate fell to 5.4 percent, the lowest level since May 2008.
“In a rising market, there is normally a gap between growth in labor and material costs and growth in bid costs,” noted Julian Anderson, president of Rider Levett Bucknall North America.
“Looking forward, we observe that this gap has been steadily increasing since 2013 and is likely to widen even if the construction industry recovery strengthens.”
According to the U.S. Department of Commerce, construction put- in-place during March 2015 was estimated at a seasonally adjusted annual rate of $966.6 billion, which is 0.6 percent below the revised February estimate of $972.9 billion.
The March 2015 figure is 2.0 percent above the March 2014 estimate of $947.3 billion. The value of construction for the first three months of this year was $206.7 billion, 3.2 percent above the same period in 2014.
Rider Levett Bucknall tracks construction costs in 12 major U.S. cities. From January 1, 2015 through April 1, 2015, the national average increase in construction cost was approximately 1.2 percent.
Chicago and Honolulu experienced the greatest increases showing inflation of 1.6 and 3.0 percent respectively.
Several other North American locations experienced inflation between 1 and 1.3 percent with Boston, Los Angeles, New York, and Phoenix all experiencing less than 1 percent change in the quarter.