Meeting_Body
CONSTRUCTION COMMITTEE
SEPTEMBER 15, 2022
Subject
SUBJECT: LOS ANGELES CONSTRUCTION MARKET ANALYSIS- 2022 UPDATE
Action
ACTION: RECEIVE AND FILE
Heading
RECOMMENDATION
Title
RECEIVE AND FILE the Los Angeles Construction Market Analysis 2022 Update.
Issue
ISSUE
Since the passage of Measure M, the construction industry has experienced significant challenges related to the cost and availability of labor and materials. The COVID-19 pandemic has exacerbated these issues, creating extreme volatility and implications regarding Metro's ability to deliver an ambitious capital program.
Background
BACKGROUND
In August 2021, Metro published the 2021 Construction Market Analysis. Since the 2021 report, Metro staff have regularly presented construction market updates on inflation, material prices, bid prices, labor and employment, outlook, and trends. This status report provides updates on the construction market through the second quarter of calendar year 2022.
Discussion
DISCUSSION
Inflation - Based on the latest U.S. Department of Labor's Bureau of Labor Statistics (BLS), inflation has climbed to 9.1% compared to a year ago. This is the highest inflation rate in the last 40 years. In previous updates, construction inflation has increased at a faster rate than consumer inflation, but now consumer inflation has caught up with the pace of construction inflation nationally. However, construction inflation in California (based on ENR's Building Cost Index for Los Angeles and San Francisco) is still trending higher than both national consumer and construction inflation
Materials Prices - While material prices have had wild swings over the past year, such as steel and lumber, most construction materials are beginning to stabilize. For example, steel, aluminum and copper/brass, products have all decreased in the past month. On the other hand, diesel fuel has skyrocketed over 100% within the past year due to increased demand and Russia's inva...
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