Vermeulens has released its market outlook report for the first quarter of 2018. Key points include:
- Construction Price escalation nationally has trended to 4% per annum for Q1 2018.
- Construction Cost Trendline: 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%.
- Commodity prices have continued the upward trend through Q1. Energy and metals indices rose sharply coming into 2018 before experiencing corrections near the end of Q1.
- Consumer Price Index: After a positive trend in the second half of 2017, CPI has slowed and fallen below expected long term averages at 2.6%.
- Construction Dollar Volume has increased by 3.6% year over year (Mar 17/Mar 18). Year over year growth can be attributed to Residential (5.3%) and Infrastructure (5.5%) spending. Non‐Residential spending has continued its upward trend from 2017 Q4 and is up 2.5% year over year.
- New York Stock Exchange: The stock market has slowed after reaching all‐time highs in 2017, with Q1 yielding a 2.8% decrease in equities.
- Growth in Employment: Six month rolling average job growth at the end of Q1 sits at 216,000 jobs, showing a reversal of the moderating trend since the second half of 2014. The 324,000 jobs added in February were the main driver of this trend reversal. Labor force participation rates are high by historic measures but do not appear to be causing inflationary pressure, perhaps due to increased productivity.
- Construction Job Growth: We are at full employment in the construction sector. Q1 has seen the addition of 85,000 construction jobs (1.2%) nation‐wide. Wage and profit increases in the sector will continue to draw employment from new entrants and other sectors.
- Gross Domestic Product remained in line with long term expectations and carried a 2.5% growth rate through Q1.
The complete Market Outlook – Q1 2018 report is available from Vermeulens.