Report: U.S. construction industry in “best shape” since financial crisis
January 7, 2015.
RLB’s Fourth Quarter 2015 USA Construction Cost Report cites Fed’s increase in federal funds rate as positive indicator of overall health of U.S. economy. Report shows value of new construction up 10.5% since 2014.
PHOENIX, AZ – Rider Levett Bucknall (RLB) – international property and construction consultants, and industry leader in cost research – reports that the U.S. construction industry “is in the best shape that it has been since the depths of the financial crisis,” following continued upward trends in construction activity and steady growth in the last half of 2015. The firm notes that, according to the Bureau of Labor Statistics, construction unemployment is down to 6.2% – nearly at economic full employment – and that its research shows that activity is up in virtually all areas, with the possible exception of the oil centers. The firm reported its findings in its newly released Fourth Quarter 2015 USA Construction Cost Report.
In the report, RLB cited the recent decision of the Federal Reserve Bank’s Open Market Committee to raise the target federal funds rate to a range of 0.25% to 0.50%, as an action that shows that the Federal Reserve believes the economic recovery is sustainable. Quoting Janet Yellen, Chair of the Board of Governors of the Federal Reserve System, the report states that “The monetary policy remains accommodative and is supportive of further economic improvement and a return to 2% inflation (CPI).”
“As anticipated, the Fed recently raised interest rates in the last quarter of the year. This is a good sign that the steady growth we saw throughout 2015 is likely to continue through the first quarter 2016,” stated Julian Anderson, president of RLB in North America. “While the recent 0.25% increase in interest rates is unlikely to dampen activity for the construction industry, we advise developers and investors to consider long-term outlooks when considering when to build.”
According to the U.S. Department of Commerce, construction put-in-place during October 2015 was estimated at a seasonally adjusted annual rate of $1,094.2 billion, which is 0.6% above the revised August estimate of $1,087.5 billion. The September 2015 figure is 14.1% above the September 2014 estimate of $959.2 billion. The value of construction for the first nine months of this year was $786.6 billion, 10.5% above the same period in 2014.
RLB tracks construction costs in 12 major U.S. cities. From July 1, 2015 and October 1, 2015 the national average increase in construction cost was approximately 1.32%. With the exception of Las Vegas, each city had an increase of at least 1% this quarter, ranging from 0.97% (Las Vegas) to 1.73% (San Francisco).
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