Source: financialweek.com

Construction labor and materials costs could increase rapidly next year in spite of the construction slowdown, consistent with the Associated General Contractors of America, a deal group.

In its Construction Inflation Alert story, issued this week, the Arlington, Va.-based organization told that the contractors should "expect larger materials and labor cost increases in 2008 than they have experienced in what went before 12 months.

In a discussion, Mr. Simonson said construction worker wages are estimated to rise next year due to a demand for well skilled labor of the type not seen in residential construction. For instance, he expects that construction of industrial projects like power plants and refineries has previously begun to rise, so there is raising demand for pipe fitters, boilermakers and tower crane operators, "and you just don't come across them at single-family home sites. So contractors building those projects are have to rise up the wages and benefits" to pull towards workers with those skills.

Construction material costs have been on a fast rise as well, at just over double the general rate of inflation. The trade group said that "The cumulative increase in the producer cost index for construction inputs was 28% from the end of 2003 through August, vs. the 13% raise in the consumer price index for urban consumers".