RISING MATERIALS PRICES, FLAT PRICES FOR FINISHED PROJECTS SQUEEZING HARD-HIT CONSTRUCTION INDUSTRY, ECONOMIST NOTES

Latest Producer Price Index Figures Show Nearly 5 Percent Annual Increase in Prices for Construction Materials While Price Index for Finished Buildings Remained Flat

Construction contractors continue to be squeezed by rising prices for key construction materials and flat prices for what they can charge for finished projects, according to an analysis of October Producer Price Index figures released today by the Associated General Contractors of America.  Prices for materials used in construction jumped by 0.6 percent in October and 4.8 percent over the past 12 months, while the price index for finished buildings remained flat.

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AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

CONSTRUCTION CONTRACTORS CAUGHT BETWEEN RISING MATERIALS COSTS AND STAGNANT PRICES FOR CONSTRUCTION SERVICES

Analysis of New April Producer Price Index Shows Increasing Pressure on Contractors to Raise Prices to Survive, Construction Economist Notes

Construction contractors continue to be squeezed between rising materials costs and falling output prices according to a new analysis of materials costs conducted by the Associated General Contractors of America.  The association noted that even as the producer price index leapt in April for key construction components, the amount contractors charge for construction services remains depressed. (more…)

The producer price index (PPI) for finished goods jumped 1.1% from February to March, not seasonally adjusted (0.7%, seasonally adjusted), and 6.0% over 12 months, the Bureau of Labor Statistics (BLS) reported on April 22. The PPI for inputs to construction industries, a weighted average of materials used in every type of construction, plus items consumed by contractors such as diesel fuel, rose 1.3% and 4.8%. By segment, the increases were: highway and street construction, 1.6% and 8.5%; other heavy construction, 1.6% and 5.3%; nonresidential buildings, 1.3% and 4.4%; multi-unit residential, 1.0% and 3.0%; and single-unit residential, 1.0% and 2.8%. The increases were driven by jumps in the PPIs for several materials: diesel fuel, 8.9% and 62%; steel mill products, 3.4% and 11.3%; lumber and plywood, 2.2% and 14%; and plastic construction products, 1.4% and 2.7%. Gypsum products rose 1.0% for the month but were still down 9.1% from a year before. Conversely, two PPIs fell for the month but jumped from a year ago: copper and brass mill shapes, -3.3% and 47%; and aluminum mill shapes, -1.5% and 13%. The materials price rise worsened the squeeze on contractors, which continued cutting prices for finished buildings and subcontracting work: new warehouse construction, -0.2% and -5.7%; industrial buildings, -0.5% and -5.3%; offices, -0.3% and -4.8%; schools, 0 and -2.2%. The PPIs for new and remodeling nonresidential building work by electrical contractors fell 0.3% and 3.5%; roofing, -0.4% and -1.9%; concrete, +0.4% and -1.9%; and plumbing, -0.3% and +0.5%.

AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.

AGC has compiled tables of PPIs for construction materials and segments as well as analysis. The data is from the Bureau of Labor Statistics monthly report and covers over 50 construction specific data series.