Construction price escalation nationally has trended to 4% per annum for Q3 2018. Due to consistent increases in construction costs over the past few years, Vermeulens Index long term trendline is up from 3.3% to 3.4%.
Vermeulens market reports are based on actual bid prices in the Institutional-Commercial-Industrial construction industry. Forecasts are based on leading indicators and historical comparative analysis.
Commodity prices have seen little to no growth since Q2 2016, while falling almost 10% in Q4 2018. Industrial metals and energy indices have fallen in similar fashion to end off the year.
Consumer price index: After a positive trend in the second half of 2017, CPI growth has slowed and dropped the long term average from 2.6% to 2.5%
Construction dollar volume has increased by 3.8% year over year (Nov 17/Nov 18). Year over year growth can be attributed to Residential (3.2%) and Infrastructure (4.8%) spending. Non-Residential spending has continued its upward trend from 2017 Q4 and is up 4.3% year over year.
The stock market began entering a correctional period at the end of Q3, and experienced a heavy correction erasing all gains from 2018 by the end of December. The NYSE fell 13% in Q4, and 11% overall in 2018.
Six-month rolling average job growth at the end of Q4 sits at 254,000 jobs, a reversal of the moderating trend since the second half of 2014. Labor force participation rates are high by historic measures but do not appear to be causing inflationary pressure.
We are at full employment in the construction sector. Q4 has seen the addition of 69,000 construction jobs (0.9%) nation-wide. Wage and profit levels in the sector will continue to draw employment from new entrants and other sectors.
Gross Domestic Product (GDP) maintained a strong annualized growth rate of 4% through Q4 2018. Long term expectations have fallen slightly. GDP growth since 1990 follows a 2.5% trendline, but the past decade is more in line with a 2.2% annual growth rate.
Recently Published Market Outlook Quarterly Reports
Market Outlook Quarterly - Q4 - 2018