Wide variances predicted for 2008 construction economy
Perhaps the most accurate word for predicting the construction economy in 2008 is “tumultuous,” according to Ken Simonson, the chief economist for the Associated General Contractors of America (AGC).
Simonson reports that some nonresidential segments such as energy will grow, while others such as lodging will slow or decline. Diesel fuel, copper and steel prices will increase but a slumping demand for gypsum and other residential construction products may help moderate building costs.
Labor accounts for roughly half the cost of a construction project, and shortages mean higher wage. Simonson predicts that some crafts may experience labor shortages, but workers in the residential specialty trades will be plentiful.
Overall, Simonson predicts overall nonresidential building cost increases of less than 6% and wage increases from 4.5% to 5.5%.
