The quarterly numbers and the monthly numbers are telling different stories, and the quarterly ones are more useful right now.
Turner Construction’s Building Cost Index rose 5.2% year over year in the second quarter and 1.4% from the first, according to a July 24 release from the country’s largest contractor by revenue. Turner has tracked the index for more than 80 years using conditions on its own projects: labor rates and productivity, material prices, and how competitive the bidding market is in a given region.
Where the construction cost pressure is coming from
Attilio Rivetti, the Turner vice president who compiles the index, put it plainly. “Demand remains strongest in data centers, semiconductors, advanced manufacturing, and mission-critical facilities, particularly in the Midwest and Southeast,” he said. “The industry’s biggest challenge continues to be the availability of skilled Mechanical and Electrical labor.”
That’s the part worth sitting with. The binding constraint Turner reports isn’t steel or switchgear, it’s the trades that install them. On a large mission-critical job, M&E can run half the contract value, and if the crews aren’t available at any price the schedule moves regardless of what the material takeoff says.
Why the monthly data looks like noise
Nonresidential input costs fell 1.1% month over month in June per the Bureau of Labor Statistics. That came after a 2.6% jump in May that produced the fastest annual increase since the pandemic. Two months, opposite directions, no trend.
Estimators can’t work off a series that whipsaws like that, which is why a project-based index built from real bid conditions carries more weight than the PPI right now. Turner is explicit that its index doesn’t necessarily track other published measures.
What’s still unpriced
A 50% tariff on key imports from Canada takes effect August 19. The Federal Reserve held rates steady on July 29 with three dissents citing inflation above 2% for more than five years. Neither is fully in the Q2 number.
“Looking ahead, owners and contractors will be watching material costs, tariff policy, and supply-chain conditions closely,” Rivetti said. “Uncertainty in these areas reinforces the importance of disciplined planning, early procurement, and proactive risk management.”
Early procurement is doing a lot of work in that sentence. It’s the one lever a contractor actually controls when the index says the problem is people, not parts. See also our reporting on where steel sheet prices landed this week and the Hybar Mill 2 rebar expansion now under way in Arkansas.