ARLINGTON, VA.—Rising construction materials prices in the United States appear to be starting to drive up the price of construction projects in the U.S., according to analysis of government data by the Associated General Contractors of America (AGC) released recently.
Association officials noted despite a jump in what contractors charge for projects, the rise in materials prices is still much higher.
“After being battered by unprecedented price increases for many materials, contractors are finally passing along more of their costs,” said Ken Simonson, the association’s chief economist, in a statement. “Meanwhile, supply-chain bottlenecks and labour shortages continue to impede contractors’ ability to finish projects.”
The producer price index for new nonresidential construction — a measure of what contractors say they would charge to erect five types of nonresidential buildings — jumped 7.1 per cent from September to October and 12.6 per cent over the past 12 months. But an index of input prices — the prices that goods producers and service providers such as distributors and transportation firms charged for inputs for nonresidential construction — climbed by an even steeper 21.1 per cent compared to October 2020, including a 1.3 per cent increase since September.
Many products, as well as trucking services, contributed to the runup in construction costs, Simonson observed. The price index for steel mill products more than doubled, rising nearly 142 per cent since October 2020. The indexes for both aluminum mill shapes and copper and brass mill shapes jumped more than 37 per cent over 12 months, while the index for plastic construction products rose more than 30 per cent.
The index for gypsum products such as wallboard climbed 25 per cent and insulation costs increased 17 per cent. Trucking costs climbed 16.3 per cent. 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, doubled over the year.