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Turkish construction association says labor cost increases

ISTANBUL - Hürriyet Daily News | 8/18/2010 12:00:00 AM |

Labor costs in Turkey’s construction industry increased by 3.14 percent due to wage increases during the second quarter of this year, says IMSAD report

Labor costs in Turkey’s construction industry increased by 3.14 percent due to wage increases during the second quarter of this year, the Association of Turkish Building Material Producers, or IMSAD, said.

According to a report released by IMSAD Wednesday, demand in the construction sector remained considerably low during the second quarter, triggering a decrease in the costs of materials. The recent wage increase was delayed during the global crisis, the report said.

In the second quarter of 2010, the cost of construction materials fell by 0.5 percent while the cost of production rose by 0.36 percent, compared to the previous quarter. Labor costs increased by 3.14 percent in the second quarter of 2010, compared to the previous year, due to the wage increase.

Commodity prices also affected the cost of construction materials, and the total cost of production, during the second quarter.

Falling commodity prices have caused a decrease in the costs of materials, according to the IMSAD report.

The report highlighted that the demand in construction materials might continue to be slightly low in the following quarters, considering the currently high number of real estate stocks in the market waiting for new owners.

According to the report, compared to the fourth quarter of last year the general cost of construction materials increased 3.49 percent during the first quarter of this year, but only 0.36 percent in the second quarter.

“In May, production in the non metallic construction materials’ industry increased by 18.9 percent, in comparison with the same period of last year. This year, in March, April and May, production increased 22.07 percent, 19.15 percent and 18.09 percent respectively,” the report stated.

IMSAD also mentioned the “base effect,” meaning that the figures represent an annual rise over the last years’ record-low figures.

IMSAD said the construction sector is now waiting for a major boom which potentially could pave the way to for more people to be employed in the sector. The construction sector employed around 1.4 million people in Turkey in Jan. 2010, according to the report. In March and April, employment increased by 11.47 percent and 12.27 percent respectively.

[HH] Recession process in US

Construction still remains in recession, with most companies either having halted their projects or decided not to start new projects at all. According to the IMSAD report, new construction projects decreased by 5.02 percent by June, compared to the previous month. In July 2010, continuing projects increased 5.46 percent in comparison with May, 2010 in the United States.

According to a report from the U.S. Census Bureau released in August, private nonresidential construction spending has shrunk by 24.1 percent since June 2009. In contrast, total nonresidential construction spending which includes both private and public construction was up 0.4 percent since May, standing at $567.5 billion in June. The figure is down by 15.2 percent from the same period the last year.

“Stake holders in privately financed nonresidential constructions continue to look for signs of recovery, says Anirban Basu, chief economist with Associated Builders and Constructers. According to Basu, the bureau’s report shows that the resurgence of the construction industry sector has yet to begin.

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