The prices contractors pay for construction materials far outstripped the prices contractors charge in the 12 months ending in September, despite a recent decline in a few materials prices, while delivery problems intensified, according to an analysis by the Associated General Contractors of America of government data released today. Association officials urged Washington officials to end tariffs on key construction materials and take steps to help unknot snarled supply points.
“Construction materials costs remain out of control despite a decline in some inputs last month,” said Ken Simonson, the association’s chief economist. “Meanwhile, supply bottlenecks continue to worsen.”
The producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose 5.2% over the past 12 months, despite a decline of 0.9% in the latest month. From September 2020 to last month, the prices that producers and service providers such as distributors and transportation firms charged for construction inputs jumped 17%, Simonson noted.
There were double-digit percentage increases in the selling prices of most materials used in every type of construction with the exclusion of lumber and plywood, which fell 12.3% during the past 12 months.
The producer price index for steel mill products increased by 134% compared to last September. The index for copper and brass mill shapes rose 39.5% and the index for aluminum mill shapes increased 35.1%. The index for plastic construction products rose 29.5%. The index for gypsum products such as wallboard climbed 23%. The index for insulation materials rose 19%, while the index for prepared asphalt and tar roofing and siding products rose 13.1%.
In addition to increases in materials costs, transportation and fuel costs also spiked. The index for truck transportation of freight jumped 15%. Fuel costs, which contractors pay directly to operate their own trucks and off-road equipment, as well as through surcharges on freight deliveries, have also jumped.
Association officials added that many contractors are experiencing extreme delays or uncertainty about delivery dates for receiving shipments of many types of construction materials. The association officials urged the Biden administration to immediately end tariffs on key construction materials. In addition, they asked for an all-out effort to help ports and freight transportation businesses move goods more quickly
“The tariffs on lumber, steel, aluminum, and many construction components have added fuel to already overheated prices,” said Stephen E. Sandherr, the association’s chief executive officer. “Ending the tariffs would help immediately, while other steps should be taken to relieve supply-chain bottlenecks.”
View producer price index data. View chart of gap between input costs and bid prices. View the association’s Construction Inflation Alert.
Related Stories
Market Data | Jul 17, 2020
7 must reads for the AEC industry today: July 17, 2020
Kennedy Middle School's new Administration/Family Center and Tips to make optimal use of salvaged materials.
Market Data | Jul 16, 2020
Final NEPA rule will make it easier to rebuild infrastructure, reinvigorate the economy, and continue protecting the environment
Administration’s final reforms to the federal environmental review process fix problems with prior process, maintain environmental rigor, and accelerate needed infrastructure improvements.
Market Data | Jul 16, 2020
5 must reads for the AEC industry today: July 16, 2020
1928 hotel reimagined as a new resiential and cultural hub and Walgreens plans hundreds of doctor's offices at its stores.
Market Data | Jul 10, 2020
5 must reads for the AEC industry today: July 10, 2020
The world's tallest hybrid timber tower and the Florida Gators have a new $65 million ballpark.
Market Data | Jul 9, 2020
6 must reads for the AEC industry today: July 9, 2020
The world's most sustainable furniture factory and what will construction look like when COVID-19 ends?
Market Data | Jul 8, 2020
North America’s construction output to fall by 6.5% in 2020, says GlobalData
Even though all construction activities have been allowed to continue in most parts of the US and Canada since the start of the COVID-19 pandemic, many projects in the bidding or final planning stages have been delayed or canceled.
Market Data | Jul 8, 2020
5 must reads for the AEC industry today: July 8, 2020
AEMSEN develops concept for sustainable urban living and nonresidential construction has recovered 56% of jobs lost since March.
Market Data | Jul 7, 2020
Nonresidential construction has recovered 56% of jobs lost since March employment report
Nonresidential construction employment added 74,700 jobs on net in June.
Market Data | Jul 7, 2020
7 must reads for the AEC industry today: July 7, 2020
Construction industry adds 158,000 workers in June and mall owners open micro distribution hubs for e-commerce fulfillment.
Market Data | Jul 6, 2020
Nonresidential construction spending falls modestly in May
Private nonresidential spending declined 2.4% in May and public nonresidential construction spending increased 1.2%.