Once again, our report on the state of the industry brings some good news and some not-so-good news.

The good news: demand is up, material pricing is steady with no inflation, borrowing rates are good, and consumer confidence is growing.

Nonresidential construction spending is up 4% year over year according to U.S. Census Bureau data. Nationwide, material prices remain flat, as reflected in the latest PPI (Producer Price Index) for inputs to construction industries, which currently shows a 1.6% increase year over year. On the other hand, material input prices (for those raw materials that go into cement, roofing, insulation etc.) are falling, led by a sharp drop in natural gas and crude petroleum prices. In addition, iron, steel, and lumber prices have all fallen in the last month. The effect this will have on future material prices is yet to be seen, but the increase in demand may hold commodity prices steady or even cause increases in prices of some materials in 2015, specifically cement and lumber.

The not-so-good news: the labor market is tight in our industry, and with growing demand, this puts pressure on wages and could drive up construction costs in the near future.

Here’s a snapshot of the construction labor market in our region right now:

  • Arkansas construction employment increased by 8.4% (3,900) from 2013 to 2014.
  • Kansas construction employment increased 2.4% (1,400) from 2013 to 2014.
  • Missouri saw very little change for 2013-2014, with a -0.1% (-100) decline.
  • Oklahoma construction employment increased by 1.8% (1,400) from 2013 to 2014.
  • The impact of Texas’ labor market demand is something of concern, with 2013-2014 growth at 7.7% (47,300).

Preconstruction team leaders in all of our areas report the same concerns. All markets report material pricing is currently flat; however, all have a big backlog of work (by numerous contractors), all geared up to start in late spring and early summer. Some of these projects are very large, especially in Oklahoma, and will draw numerous resources from the local subcontractor and supplier markets.

Source: Associated General contractors of America, www.agc.org, from Bureau of Labor Statistics (BLS), U.S. Department of Labor, www.bls.gov/sae, 12/19/2014. BLS posts data either for construction alone or construction, mining and logging combined.