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 | May 10, 2018
Construction costs surge in April as new tariffs and other trade measures lead to significant increases in materials prices
Association officials warn that the new tariffs and resulting price spikes have the potential to undermine benefits of tax and regulatory reform, urge administration to reconsider.
Market Data | May 7, 2018
Construction employers add 17,000 jobs in April and 257,000 for the year
Unemployment rate for construction increases slightly compared to year earlier as higher pay levels appears to be attracting people with recent construction experience back into the workforce.
Market Data | May 2, 2018
Construction employment increases in 245 metro areas between March 2017 & 2018, as trade fights & infrastructure funding shortfalls loom
Houston-The Woodlands-Sugar Land, Texas and Weirton-Steubenville, W.Va.-Ohio experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines.
Market Data | May 2, 2018
Nonresidential Construction down in March, private sector falters, public sector unchanged
February’s spending estimate was revised roughly $10 billion higher.
Market Data | Apr 30, 2018
Outlook mixed for renewable energy installations in Middle East and Africa region
Several major MEA countries are actively supporting the growth of renewable energy.
Market Data | Apr 12, 2018
Construction costs climb in March as wide range of input costs jump
Association officials urge Trump administration, congress to fund infrastructure adequately as better way to stimulate demand than tariffs that impose steep costs on contractors and project owners.
Market Data | Apr 9, 2018
Construction employers add 228,000 jobs over the year despite dip in March
Average hourly earnings increase to $29.43 in construction, topping private sector by nearly 10%; Association officials urge updating and better funding programs to train workers for construction jobs.
Market Data | Apr 4, 2018
Construction employment increases in 257 metro areas between February 2017 & 2018 as construction firms continue to expand amid strong demand
Riverside-San Bernardino-Ontario, Calif. and Merced, Calif. experience largest year-over-year gains; Baton Rouge, La. and Auburn-Opelika, Ala. have biggest annual declines in construction employment.
Market Data | Apr 2, 2018
Construction spending in February inches up from January
Association officials urge federal, state and local officials to work quickly to put recently enacted funding increases to work to improve aging and over-burdened infrastructure, offset public-sector spending drops.
Market Data | Mar 29, 2018
AIA and the University of Minnesota partner to develop Guides for Equitable Practice
The Guides for Equitable Practice will be developed and implemented in three phase.
