Report: Construction costs fall, employment growth softens in 2Q

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The cost of construction in Milwaukee fell slightly in the second quarter of 2019, but remains above historic averages, as year-over-year construction employment growth has softened locally, according to a market analysis from Mortenson Construction.

Mortenson’s construction cost index shows that while costs slowed in the second quarter, they increased 4.3% year-over-year in the Milwaukee area, compared with a 3.9% year-over-year increase last year. That’s an increase that’s largely in line with the national index while costs remain above historic averages.

While the cost of most building materials remained flat or grew moderately, some inputs such as site utilities and aluminum entrances increased by double digits between the first and second quarters of 2019. Electrical systems and structural steel fell in price by double-digits, and other components such as cast-in-place concrete and flooring remained flat.

The report notes, however, that trade disputes could continue to affect the price of common construction materials, and suggests owners plan for a 2% to 3% increase in costs in 2019.

“We are beginning to see indirect impacts of the tariffs as manufacturers have shifted away from their suppliers in China,” according to Mortenson’s report. “As these shifts in the supply chain occur, some manufacturers and suppliers have taken the opportunity to adjust their pricing, leading to increased costs.”

Meanwhile, employment growth rate from last year fell in the second quarter of 2019. Employment growth fell 2% from last year, and has fallen year-over-year in the first half of 2019. Mortenson anticipates modest to flat employment growth in the industry for the year. Employment statistics included in Mortenson’s report are based on Bureau of Labor Statistics data.