Engineering and construction costs fell in April—the first decline in 41 consecutive months—according to a key index just released by IHS Markit and the Procurement Executives Group.
The PEG Engineering and Construction Cost Index, which is calculated based on survey data from procurement executives in engineering, procurement and construction firms (EPC), indicates falling prices at any figure below 50.
In April, the index registered at 34.9 overall, with the materials and equipment portion at 35.2 and the subcontractor portion at 34.3.
On the materials side, prices for 11 of 12 components were reported to decline, particularly fabricated steel, alloy steel pipe and carbon steel pipe.
“The sharp decline recorded in the index highlights the rapid deterioration in the U.S. economy and, more specifically, in the energy industry since January,” says John Mothersole, director of research at IHS Markit pricing and purchasing, He adds that the U.S. economic recovery is expected to be "slow and sluggish" into 2021.
IHS Markit forecasts a 37% decline in GDP in the second quarter, per the monthly GDP index, with a 5.1% drop in March and a 7.4% decrease in April.