ARLINGTON, VA. — The price of materials and services used in nonresidential construction in the U.S. inched up 0.2 per cent from June to July, while a government index that measures contractors’ bid prices fell by 1.4 per cent, according to an analysis by the Associated General Contractors of America released recently.
Association officials said contractors are finally seeing some relief from recent supply chain problems and price escalations, but the competitive market means key materials are still hard to find.
The initial price shock from the pandemic and Russia’s attack on Ukraine has faded, but long lead times remain for electrical equipment and construction machinery. Cement, lumber, plywood and asphalt coatings are some of the materials showing persistent price increases, despite better planning, said the association.
The producer price index for new nonresidential construction — a measure of what contractors report they would charge to put up a specific set of buildings — fell 1.4 per cent in July. That decrease followed no change the month prior and a slight decline in May.
Prices for most major construction inputs were stable or declined in July. Some of the greatest declines included diesel fuel, falling 8.4 per cent for the month, steel mill products dropping 7.6 per cent, and fabricated structural metal, down 6.4 per cent.
Association officials said new Buy America requirements that are part of the Bipartisan Infrastructure Law will limit the supply of materials contractors can use and increase the costs of those products as the guidance goes into effect. They noted the new requirements are so strict that many products currently made in the U.S. would not be compliant due to containing small components that are sourced from abroad.
“Federal officials continue to inhibit the ability of contractors to utilize an established diversified construction material supply chain by drumming up strict regulations,” said Stephen Sandherr, the association’s CEO, in a statement. “Infrastructure is needed now, and until we have the capability of keeping all manufacturing on U.S. soil, we need to take advantage of all resources available.”