Briefing at a Glance

  • The Turner Building Cost Index rose 5.2% year-over-year in the second quarter, further confirming the annual upward trend in construction costs, despite a brief dip in monthly data.
  • According to a press release issued on July 24, the New York-based Turner Construction Company, the industry's largest contractor by revenue, saw its cost index rise 1.4% month-over-month, driven primarily by demand for labor and materials in high-growth sectors.
  • "Demand for data centers, semiconductors, advanced manufacturing, and mission-critical facilities remains strongest, particularly in the Midwest and Southeast," said Attilio Rivetti, Turner's vice president responsible for compiling the index, in the press release. "The industry's biggest challenge remains the availability of skilled mechanical and electrical labor."

In-Depth Analysis

Monthly cost data has shown a volatile trend recently. According to the latest data from the U.S. Bureau of Labor Statistics, nonresidential input costs fell 1.1% month-over-month in June, but had surged 2.6% in May, a jump that contributed to the fastest annual increase since the pandemic.

This volatility means contractors must be more cautious when evaluating potential projects, as global uncertainties and changes in domestic tariff policies keep input price targets in flux. Just last week, President Donald Trump announced a 50% tariff on key imports from Canada, set to take effect on August 19.

On Wednesday, the Federal Reserve held interest rates steady, but three committee members dissented, citing inflation exceeding the 2% target for more than five years, according to CNBC.

"Looking ahead, owners and contractors will closely monitor material costs, tariff policies, and supply chain conditions," Rivetti said in Turner's press release. "Uncertainty in these areas underscores the importance of disciplined planning, early procurement, and proactive risk management as projects move forward."

Turner has compiled its construction cost forecast for over 80 years, based on nationwide conditions observed in its own projects, including labor rates and productivity, material prices, and the competitive environment. The company stated that its index may therefore not align with other publicly available cost indices.