The Markit Materials Price Index (MPI) is expected to further decline in the fourth quarter, after a dramatic and unexpected rise in the second quarter of 2021.
As construction activity returns to or even exceeds pre-pandemic levels, the industry is grappling with a worsening labor shortage. The shortage is due to a number of reasons, including members of the workforce opting to retire early in response to the pandemic and others yet to return amid health concerns. This trend is expected to continue into 2022, pushing labor cost escalation higher than in previous years. With owners and clients focusing more on sustainability, understanding and reducing carbon cost in construction is becoming a priority. We expect demand for sustainability-focused services and materials to increase across the industry.
We expect prices to fall steadily through 2022. Production for most commodities is beginning to catch up to demand. As the economy reopens and restrictions are lifted, we expect prices to fall further.