Economic Reports Suggest Inflation's Effects Are Limited
An informal survey by the Associated General Contractors two weeks ago suggested projects are being trimmed or cancelled because of rising material prices. Economist Serena Tse of GE Capital Solutions says the ravages of inflation on overall construction activity so far this year are limited.
Tse says non-residential construction is strong and the sector where material price inflation may matter most—offices—won’t be a significant factor in every office project. Non-residential construction, Tse notes, is showing double-digit growth across virtually all sectors. For example, in the second quarter of 2006, commercial work is up 16.5%, offices are up 18.4%, % and power is up 27.7%. Manufacturing is up 32.6%, a big jump.