The Rider Levett Bucknall (RLB) Third Quarter Cost Report shows that the U.S. construction industry continued to experience an upward trend last quarter, with three consecutive months of growth. The report also states cost escalation in Honolulu in the second quarter hit 2.76% (11.0% annualized) leading its construction costs to eclipse those of New York City, making it the most expensive city to build in the USA.
RLB’s research indicates that national activity for construction put-in-place jumped by nearly 12% between the third quarter 2014 and the second quarter 2015; the unemployment rate for construction laborers decreased during the same period; and cost escalation nationally sat at 3.56% for the past year.
“Three consecutive months of growth in the AIA’s Architectural Billing Index and a 12% increase in construction activity is an excellent sign that the U.S. construction industry is finally gaining some momentum,” stated Julian Anderson, president of RLB in North America. “We anticipate steady growth through the rest of 2015 and into the first quarter 2016, especially if the Fed raises interest rates in the last quarter of the year.”
Architectural Billing Index and GDP shows increases
To support its findings, the firm cited the American Institute of Architects’ (AIA) Architectural Billing Index (ABI), which stated that July’s ABI was 55.7, up from April’s score of 48.8, marking “the third consecutive month of growth, breaking the recent ABI pattern of two months of progress after two months of contractions.” The report also observed that as GDP increased at a robust 3.7%, unemployment was steady at 5.5%, and general economy-wide inflation (CPI) sat at 1.06% (4.24% annualized), despite the U.S. Federal Reserve Bank’s decision to keep interest rates unchanged. The national construction unemployment rate fell to 6.3%, which was still higher than the general rate of unemployment.
According to the U.S. Department of Commerce, construction put-in-place during June 2015 was estimated at a seasonally adjusted annual rate of $1,064.6 billion, which is 0.1% above the revised May estimate of $1,063.5 billion. The June 2015 figure is 12.0% above the June 2014 estimate of $950.3 billion. The value of construction for the first six months of this year was $482.7 billion, 8.0% above the same period in 2014.
RLB tracks construction costs in 12 major U.S. cities. From April 1, 2015 and July 1, 2015 the national average increase in construction cost was approximately 1.15%. Honolulu again experienced the greatest increase showing inflation of almost 2.8% for the period. All other North American locations experienced inflation between 0.8% and 1.25% for the quarter.
About the RLB Quarterly Construction Cost Report
RLB reports on the comparative cost of construction in 12 U.S. cities on a quarterly basis, indexing them to show how costs are changing in each city in particular, and against the costs of the other 11 locations. Together with additional international and national cost compendia, the cost research equips clients with complete and relevant information to assist in key business decisions.
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