General construction cost indices and Input price indices that don’t track whole building final cost do not capture the full cost of inflation on construction projects. When jobs growth exceeds volume growth, productivity is declining. All spending includes inflation, but inflation adds nothing except $ signs to the overall growth.
Residential construction jobs peaked in Sep’24. For 2025, jobs thru Jul increased only 6,000, the slowest jobs growth (ex recessions) in 50 years. Since 2011, (excluding recession https://chicagonewsblog.com/new-buildings-are-raged-by-yaroslavl.html yrs) construction jobs thru Aug increased on average by 150,000 over the 8mo. When real residential volume is compared to real volume in 2024 we find that residential volume of business declined 9.1% in 2025.
Although I have spending increasing 8% in 2026, gains may be somewhat dependant on power supplies to new data centers. Unemployment and productivity includes only jobs counted in the official U.S. January 2026 posted the largest construction jobs increase (+48,000) in 4 years.
Construction Briefs AUG 2026
This process begins with risk identification, systematically cataloging potential threats such as weather-related delays, supply chain disruptions, regulatory changes, and labor shortages. Savvy construction managers leverage their understanding of these dynamics to forecast future costs with greater accuracy, negotiate more favorable contracts, and strategically time purchases and project starts. The construction industry operates within a complex economic landscape, where sophisticated theories and principles guide decision-making far beyond basic supply and demand. For instance, the COVID-19 pandemic caused significant supply chain issues and labor shortages, impacting project timelines and budgets worldwide. Factors such as supply chain disruptions, labor shortages, or changes in regulations can lead to unexpected costs and delays. Local and global market conditions can have profound effects on construction projects.
- Little change to 2026 forecast but revs added $73bil to 2025 base, therefore all 2026 forecast percent growth went down.
- PPI Final Demand indices include all costs and do represent actual final cost to the Owner.
- A well-crafted budget serves as a roadmap for financial management throughout the project lifecycle.1
- Volume declined in 2025 and is expected to continue declining in 2026.
- Top interviews, articles, and news about sustainability in the construction industry, curated by AZoBuild – The A to Z of the Building Industry.
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It is expected to continue on a slowly declining spending slope for at least the next year. Through July data, ytd2025 is -2.2% compared to ytd2024. When a small set of data is used, the spending in each of those months is compared to the 20-yr average for those months and projected out to get 100% or a full 12 months of spending. Each month produces a different share of annual spending. https://homadeas.com/observation-tower.html However, there are no shortage of reports of cost pressures.
The price change we see in the PPI for construction materials reflects the domestic material prices of ALL other domestically produced materials used in the industry. Annual averages should be used to report inflation. YTD can be the growth so far this year, that is, growth compared to December of the prior year, or it can be YTD currentyr/YTD lastyr. Few firms project index values out past the current year, therefore all future projections in these tables are by Construction Analytics. Therefore, the index should NOT be compared mo/mo. Producer Price Index (PPI) Final Demand Indices are an example of construction cost indices that represent whole building costs.
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August and September have the highest rates of annual spending, but with slightly higher rates of variation. For instance, over a period of 25 years, June and July have averaged 9.1% and 9.2% of actual annual spending, with a high/low range variation of less than +/- 0.25%. Constant $ for all tables and plots in this report is inflation adjusted to mid 2024. Only Non-bldg Infrastructure has posted real volume of business gains in 2025 and 2026. Actual inflation values are all final cost and are a composite of eight different sources, so the inflation carried in these reports will never be the highest or https://flarealestates.com/acid-pushed-cement-how-to-create-a-persistent.html lowest. These two words, Inflation and Escalation, both refer to the change in cost over time.
- Ex., a $10 billion data center needs an avg 40,000 jobs for 1 yr, or more like 10,000 jobs for 4 yrs.Jobs start slow.
- My forecasts as of July and again as of August data in 2025 were both within less than 1% of the reported final annual spending through December data.
- Construction PPI changes reflect pricing decisions domestic producers make on domestic products in reaction to tariffs on imported products.
- Following identification, each risk is assessed based on its probability of occurrence and potential impact on project timeline, budget, and quality.
- But recent events may lead to cancelation or delay of some future projects.
- First pass at forecast 2026, includes first Census report of final 2025 spending.
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The current world situation may/will have adverse effects on future construction inflation. Actual inflation values are a composite of eight different sources, so the inflation carried in these reports will never be the highest or lowest. Both of these subsets of data, for the last three years, predicted final annual spending within less than +/-0.5%. Using subsets of months with the lowest variation in annual spending is a way to check forecasts during the year. January and February have the lowest share of annual spending with the highest rates of variation.