US INFLATION IN JUNE REACHED 9.1% THE HIGHEST IT HAS BEEN IN 40 YEARS:

The continuing price increases highlight the severe impact that inflation has imposed on many companies & families, with the costs of materials, gasoline / diesel, energy, food & basic supplies. The unrelenting spike in inflation has produced a steep drop in consumer confidence in the USA & in many other countries around the world that are struggling with the same problem. Is the stage set for a global recession?

Some good news for a change (although it could end up to be bad news), the cost of a ton of copper has fallen below $7,000 a ton or $3.50 a pound, for the first time in more than 24 months (the impact of COVID ?). This could be the first indication that global construction activity is starting to slow down.

The US $ and the Euro are now equal for the first time in 20 years, how this will impact European construction costs is still TBD, it will most probably impact construction costs.

Inflation what’s happening around the world?

Canada’s inflation forecast to see increases in the 7.5% to 8.5% range in the next 3 months.

In Mexico, the inflation rate is heading to 8% or more by in the next 3 months.

Inflation in the Euro Zone is forecast to be in the 8% to 8.5% in the next 4 to 8 weeks.

In Saudi Arabia the reports we are getting is that construction materials & labor costs will increase by 7% to 10% in the 3rd Q of 2022

In Great Britain, the inflation rate is heading to 9.5% or more in the next 3 months.

India is forecast to see its construction inflation rate rise to between 7% and 9% in the 3rd Q of 2022.

Brazil is on track to see 11% to 13% inflation in the next 3 months.

In Egypt, the inflation rate is heading to between 12.5% to 14% or more by in the next 3 months.

Reports out of Nigeria is that inflation / escalation will range between 16% and 20% for the remainder of 2022.

In Poland the feedback we are getting is that construction materials & labor costs will increase by 13% to 14.5% in the next 8 weeks

Turkey’s inflation surged to over 70% in July & August.

South Africa is on course to see 8.5% to 10% inflation in 2022.

In the last 12 months (Year to Year) the following increases to US construction materials / production equipment have occurred, similar or larger increases have occurred in Europe, Asia, Africa, Middle East & Latin America.

•      Concrete (Ready Mix) + 3% to 8%

•      Rebar + 12% to 19%

•      Structural steel + 25% to 40%

•      Formwork + 10% to 22%

•      Bricks / Concrete Blocks + 7% to 9%

•      Windows / Glass  + 12% to 23%

•      Curtain Wall Systems + 15% to 20%

•      Lumber / Plywood / OBS + 21% to 29%

•      Drywall & Metal Studs + 14% to 25%

•      Plumbing fixtures / components + 12% to 24%

•      Electrical fixtures / components + 15% to 30%

•      Pipe & Fittings (CS / SS) + 9% to 17%

•      PVC Pipe & Fittings + 3% to 8%

•      Windows, Doors & Glass + 9% to 18%

•      Instrumentation Devices + 15% to 30%

•      Copper materials / Electrical cable + 4% to 9%

•      Elevators / Escalators + 9% to 18%

•      Production / Utility Equipment + 8% to 18%

•      Pumps / Compressors / Heat Exchangers + 9% to 18%

 As an example of construction material bottlenecks / delays, we are seeing delivery to site of windows & curtain wall systems now taking between 22 and 30 weeks from Purchase Order award, up from 8 to 16 weeks pre-COVID.

Instrumentation devices & certain M.C. valves continue to be difficult to procure, delivery of these items can take 32 to 48 weeks, just about double the time it took from the pre-COVID period.

 The majority of these price increases & delays can be attributed to (2.5 +) years of the COVID shutdowns, the recent major oil / gas & diesel cost upsurge, the Chinese COVID lockdown, the ongoing Russia – Ukraine conflict, supply chain roadblocks, skyrocketing ocean freight costs & record breaking inflation / escalation increases that is impacting food / commodities & of course the cost of construction.

US construction activity is starting to slowdown as we move into the 2nd half of 2022.

Compass International provides Construction Estimating Data for the USA & 125 countries, we forecast Engineering, Procurement & Construction cost for 2022, applying latest inflation / escalation values to our historical benchmark database.

Our Construction Cost Databases provide:

• Current construction materials, labor costs, field in-directs / preliminaries.
• Process equipment, process piping, electrical, instrumentation & insulation / painting costs.
• Skilled & Unskilled Construction Labor Rates & Installation values.
• Architects, Engineers – Construction Management billing rates.
• Square Foot / M2 Building costs (for 90 + facility types),.
• Infrastructure Benchmarks (roads, bridges, tunnels & airports).
• Offshore Construction costs. 
• Country productivity values & (2) location factors for complex (high value) & less complex (indigenous) facilities.

Our data is focused on Manufacturing (Consumer Goods, Micro-Electronics / Computer Chips), Oil / Gas, Chemical, Pipelines, Offshore, Commercial (offices, hotels, shopping centers, warehouses and airports), Pharmaceutical / Clean Rooms & Infrastructure Facilities:

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For more information contact John G. McConville CCP - Operations Director - Compass International - USA Telephone +1 (609) 577 4505

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