Engineering and construction costs increased in January, according to a report released by IHS Markit on January 27. All material categories showed increased prices for the first time since July 2018. The increase marked the third consecutive month of overall rising costs.
The IHS Markit PEG Engineering and Construction Cost Index, which is calculated based on survey data from procurement executives in engineering, procurement and construction firms (EPC), reached 63.1. The materials and equipment index rose 4.9 points, to 68.3, while the subcontractor labor index dropped slightly, to 51.1, from December's 55.4.
On the materials side, copper prices rose for the seventh consecutive month. Carbon steel pipe heat exchangers and pumps and compressors also saw a significant increase.
“Prices have picked up for the heat exchangers and pumps and compressors categories due to tighter supply and increasing input costs,” said Thomas McCartin, senior economist at IHS Markit, in a press release. “Producers have kept capacity utilization subdued even as new orders have fully recovered to early 2020 levels.”
Labor costs increased in the northeast and southern states but showed no change in the Midwest or western states. Still, survey respondents expect cost to increase within the next six months in both labor and material categories.