Prices of numerous construction materials soared again in November, outpacing the rate at which contractors raised their bid prices, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said the current steps being taken to address supply chain problems and rising prices have been insufficient and urged public officials to redouble their efforts.
“Prices for nearly every type of construction material are rising at runaway rates,” said Ken Simonson, the association’s chief economist. “These costs are compounding the difficulties contractors are experiencing from long lead times for production, gridlocked supply chains, and record numbers of job openings.”
The producer price index for inputs to new nonresidential construction—the prices charged by goods producers and service providers such as distributors and transportation firms--jumped 0.9% in November and 22.1% over 12 months. Those increases dwarfed the rise in the index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings, Simonson noted. That index climbed by 0.3% for the month and 12.4% from a year earlier.
A wide range of products used in construction, as well as trucking services, posted double-digit price increases over the past 12 months, Simonson observed. The price index for steel mill products more than doubled, soaring 141.6% since November 2020. The index for aluminum mill shapes jumped 41.1% over 12 months, while the index for copper and brass mill shapes rose 37.8%. The index for plastic construction products climbed by 32.5%. The index for gypsum products such as wallboard rose 20.9% and insulation costs increased 17.4%.
Trucking costs climbed 16.3%, as did the index for asphalt felts and coatings. The index for architectural coatings increased 12.4% and the index for lumber and plywood rose 12.2%. The index for diesel fuel, which contractors buy directly for their own vehicles and off-road equipment and also indirectly through surcharges on deliveries of materials and equipment, soared 81% over 12 months despite a 2.9% decline from October.
Association officials said the steep rise in materials prices shows that more needs to be done to tackle supply chain issues and price inflation that are making it difficult for contractors to be successful. They urged public officials to look at ways to temporarily increase capacity at backed up ports like Los Angeles/Long Beach, abandon plans to double tariffs on Canadian wood, and address rising levels of inflation.
“Rising materials prices are squeezing already slim profit margins for many contractors,” said Stephen E. Sandherr, the association’s chief executive officer. “Having strong demand for construction is important, being able to make a small amount of money on that work is vital.”
View producer price index data. View chart of gap between input costs and bid prices.
Related Stories
Market Data | Jun 17, 2021
Commercial construction contractors upbeat on outlook despite worsening material shortages, worker shortages
88% indicate difficulty in finding skilled workers; of those, 35% have turned down work because of it.
Market Data | Jun 16, 2021
Construction input prices rise 4.6% in May; softwood lumber prices up 154% from a year ago
Construction input prices are 24.3% higher than a year ago, while nonresidential construction input prices increased 23.9% over that span.
Market Data | Jun 16, 2021
Producer prices for construction materials and services jump 24% over 12 months
The 24.3% increase in prices for materials used in construction from May 2020 to last month was nearly twice as great as in any previous year
Market Data | Jun 15, 2021
ABC’s Construction Backlog inches higher in May
Materials and labor shortages suppress contractor confidence.
Market Data | Jun 11, 2021
The countries with the most green buildings
As the country that set up the LEED initiative, the US is a natural leader in constructing green buildings.
Market Data | Jun 7, 2021
Construction employment slips by 20,000 in May
Seasonally adjusted construction employment in May totaled 7,423,000.
Market Data | Jun 2, 2021
Construction employment in April lags pre-covid February 2020 level in 107 metro areas
Houston-The Woodlands-Sugar Land and Odessa, Texas have worst 14-month construction job losses.
Market Data | Jun 1, 2021
Nonresidential construction spending decreases 0.5% in April
Spending was down on a monthly basis in nine of 16 nonresidential subcategories.
Market Data | Jun 1, 2021
Nonresidential construction outlays drop in April to two-year low
Public and private work declines amid supply-chain woes, soaring costs.
Market Data | May 24, 2021
Construction employment in April remains below pre-pandemic peak in 36 states and D.C.
Texas and Louisiana have worst job losses since February 2020, while Utah and Idaho are the top gainers.