Extreme price increases continued in July for a wide range of goods and services used in construction, according to an analysis by the Associated General Contractors of America of government data released today. Association officials urged President Biden to immediately end tariffs and quotas on steel, aluminum, lumber and other essential construction items to help stave off inflationary pressure in the construction industry.
“July was the sixth-straight month of double-digit price increases for construction inputs,” said Ken Simonson, the association’s chief economist. “In addition, lead times to produce or deliver many items keep lengthening. Many reports since the government collected this price data in mid-July show the trend will continue, at a minimum into the autumn and likely beyond, unless tariffs and quotas are removed.”
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 4.4% over the past 12 months. That was a small fraction of the 25.6% increase in the prices that producers and service providers such as distributors and transportation firms charged for construction inputs, Simonson noted.
There were double-digit percentage increases in the selling prices of materials used in every type of construction. The producer price index for steel mill products more than doubled from July 2020 to last month, leaping 108.6%. The index for lumber and plywood jumped 56.8% despite a large drop in mill prices from May to July. The index for copper and brass mill shapes rose 49.0% and the index for aluminum mill shapes increased 33.2%. The index for plastic construction products rose 26.7%. The index for gypsum products such as wallboard climbed 21.6%. The index for insulation materials rose 11.8%, while the index for prepared asphalt and tar roofing and siding products rose 10.9%.
In addition to increases in materials costs, transportation and fuel costs also spiked. The index for truck transportation of freight jumped 13.8%. 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 urged the president to remove tariffs on key construction materials, including steel and aluminum. They noted that some countries have opted for quotas on steel and aluminum in place of tariffs, making supplies even tighter. They said these government limitations on key materials, if left in place, would undermine some of the benefits of the new infrastructure measure that passed in the Senate
“These tariffs and quotas are artificially inflating the cost of many key materials and doing more damage to the economy than help,” said Stephen E. Sandherr, the association’s chief executive officer. “Leaving these measures in place will undermine the broader benefits of the bipartisan new infrastructure measure the House should be passing.”
View producer price index data. View chart of gap between input costs and bid prices. View the association’s Construction Inflation Alert.
Related Stories
Multifamily Housing | Jun 22, 2016
Can multifamily construction keep up with projected demand?
The Joint Center for Housing Studies’ latest disection of America’s housing market finds moderate- and low-priced rentals in short supply.
Contractors | Jun 21, 2016
Bigness counts when it comes to construction backlogs
Large companies that can attract talent are better able to commit to more work, according to a national trade group for builders and contractors.
Market Data | Jun 14, 2016
Transwestern: Market fundamentals and global stimulus driving economic growth
A new report from commercial real estate firm Transwestern indicates steady progress for the U.S. economy. Consistent job gains, wage growth, and consumer spending have offset declining corporate profits, and global stimulus plans appear to be effective.
Market Data | Jun 7, 2016
Global construction disputes took longer to resolve in 2015
The good news: the length and value of disputes in the U.S. fell last year, according to latest Arcadis report.
Market Data | Jun 3, 2016
JLL report: Retail renovation drives construction growth in 2016
Retail construction projects were up nearly 25% year-over-year, and the industrial and office construction sectors fared well, too. Economic uncertainty looms over everything, however.
Market Data | Jun 2, 2016
ABC: Nonresidential construction spending down in April
Lower building material prices, a sluggish U.S. economy, and hesitation among private developers all factor into the 2.1% drop.
Market Data | May 20, 2016
Report: Urban area population growth slows
Older Millennials are looking to buy homes and move away to more affordable suburbs and exurbs.
Market Data | May 17, 2016
Modest growth for AIA’s Architecture Billings Index in April
The American Institute of Architects reported the April ABI score was 50.6, down from the mark of 51.9 in the previous month. This score still reflects an increase in design services.
Market Data | Apr 29, 2016
ABC: Quarterly GDP growth slowest in two years
Bureau of Economic Analysis data indicates that the U.S. output is barely growing and that nonresidential investment is down.
Market Data | Apr 20, 2016
AIA: Architecture Billings Index ends first quarter on upswing
The multi-family residential sector fared the best. The Midwest was the only U.S. region that didn't see an increase in billings.