Current construction costs fell in October, according to IHS and the Procurement Executives Group. The current headline IHS PEG Engineering and Construction Cost Index (ECCI) registered 40.9 in October, down from 43.8 in September and “well below” the neutral mark. The headline index has not indicated rising costs since December.

The current materials/equipment index slipped to 39.0, down from 41.6 in September. The pricing environment is deteriorating, IHS says, with the current materials/equipment index registering its lowest reading in the last four years. The underlying detail shows falling prices for all individual components tracked by the survey. Ready-mix concrete, which has been the strongest index over the year, dropped below the neutral mark this month, for the first time since April 2013.

“As oil prices fell during the last year, spending on construction across the oil and gas segment has been scaled back,” says Jeannine Cataldi, principal economist at IHS. “Spending on electric power-related projects moved lower as well. While there has been some strength for U.S. construction markets, the energy segment has weighed heavily on engineering, procurement and construction (EPC) firms.”

Similar to slow construction spending, prices for construction materials have been falling around 2-5% year-over-year (y/y) every month in 2015, says Deni Koenhemsi, IHS economist. “Among declining building materials, cement stood out, with prices rising around 8-9% (y/y) this year.” As construction activity picked up, cement demand was not met due to production constraints. This trend is beginning to change. In addition to seasonal factors, rising and cheaper imports are putting downward pressure on cement prices in the United States,” Koenhemsi says.

This was not the case across all indexes, as fabricated structural steel, carbon steel pipe and alloy steel pipe showed some improvement compared to September. However, their prices are still falling. Steep declines in turbines, transformers and electrical equipment indexes indicate that the price weaknesses are percolating through the supply chain, IHS says.

The current subcontractor labor index registered 45.1 in October. This marks the third month below the neutral mark and the lowest reading since the beginning of the survey four years ago. In the United States, subcontractor labor costs showed mixed results. Subcontractor labor prices hit the neutral mark in the U.S. Northeast and West. They fell in the Midwest and South. Subcontractor labor costs fell in Western Canada, but remained stable in Eastern Canada.

The six-month headline expectations index fell to 46.1 in October, reverting back to weak pricing expectations. The materials/equipment index fell to 45.0 in October from 47.7 in September. Nine individual components registered lower price expectations, IHS says. Expectations for ready-mix were still above the neutral mark but the index at 53.1 was “significantly less” than its September mark of 65.2. Expectations for future subcontractor labor costs moved below the neutral mark. The U.S. South is still leading in higher prices. However, expectations for subcontractor labor are falling in the West and Canada.