Over the last six months, the deepening recession its accompanying credit crisis have dramatically changed the construction industry’s cost picture. Construction inflation has gone from the double-digit realm just last summer to between 2% and 6% this quarter. Ten of the 14 major industry cost indexes collected by ENR for this report posted declines during the first quarter, ranging from 0.5% to 8.4%.
The reversal of inflation was led by the price collapse in crude oil and steel. “Structural steel and rebar prices are about half of what they were at their peak last year,” says John Anton, steel analyst for IHS Global Insight, Washington, D.C. Prices already are approaching production costs and cannot fall much further, he says. “However, prices can’t rise much either because there is so much idle capacity,” Anton notes.