US construction costs fell in August, according to IHS and the Procurement Executives Group (PEG). The IHS PEG Engineering and Construction Cost Index (ECCI) registered 45.7 for the month, down from 48.8 in July - a score less than 50 out of 100 indicates falling prices. The index has not indicated rising costs since December.
The current materials/equipment index slipped to 44.2, down from 47.4 in July, its lowest since March. The underlying detail showed falling prices for nine of the 12 individual components tracked by the survey.
IHS said prices for steel products showed particular weakness with the indexes for fabricated structural steel, carbon steel pipe, and shell and tube heat exchangers all indicating that prices are falling and that price declines have become more widespread.
“Steel is a buyers’ market and will remain so,” said John Anton, principal economist, IHS Pricing and Purchasing, “Current import prices are far cheaper - up to 40% - than domestic prices, but if you are doing public projects with Buy America requirements, you cannot use them. However, imports can drag down prices your rivals pay, putting pressure on mills to give you similar deals.”
The current sub-contractor labour stood at 49.1 points in August, moving the index back below the neutral mark. The majority of regions reported stable sub-contractor labour costs in August, with the exception of the Southern US. This region continues to report a tight skilled labour market due to petrochemical and LNG projects.