Labor, energy drive construction costs

Inflation in U.S. construction markets reached nearly 4 percent again during 2000, driven higher primarily by the increased costs of skilled labor and energy. Materials prices were held in check last year with average construction production inflation running at little better than 1 percent. With demand and labor market pressures easing this year, average prices are expected to rise at 3 percent or less. The U.S. Commerce Department's implicit price deflator for construction spending was 3.9 percent higher-on an annual average basis-during 2000 than during 1999.

Commercial, industrial & institutional (CII) construction spending (Billions of current dollars)

Spending in December 2000 Percent change from December 1999 Spending in Jan.-Dec. 2000 Percent change from Jan.-Dec. 1999 2000 total spending Annual percent change 2000 2001 2002
CII total
$25.34
12.5%
$304.55
11.4%
$304.55
11.4%
3.9%
7.4%
Commercial
10.82
10.0
131.32
9.8
131.32
9.8
0.9
8.0
Office
4.67
24.9
53.89
15.7
53.89
15.7
7.1
11.6
Retail
4.90
2.4
61.14
7.0
61.14
7.0
-3.7
5.6
Hotel/motel
1.25
-4.9
16.29
2.3
16.29
2.3
-2.4
3.6
Industrial
3.78
30.2
40.66
16.5
40.66
16.5
5.5
4.9
Institutional
10.74
9.8
132.57
11.5
132.57
11.5
6.3
7.7
Health care
1.68
12.0
19.67
11.8
19.67
11.8
2.2
5.4
Education
4.77
21.5
58.36
17.9
58.36
17.9
9.5
10.5
Other institutional
4.29
-1.5
54.54
5.2
54.54
5.2
4.4
5.4
Multifamily
2.21
-1.6
27.78
1.9
27.78
1.9
-1.5
3.1

Source: U.S. Department of Commerce; forecast: Cahners Economics