Non-material prices jump 21% in one year

Prices for materials and services used in new nonresidential construction jumped more than 21% from March 2021 to March 2022, according to an analysis of government data from the Associated General Contractors of America (AGC).

The association urged the Biden administration to ease key cost pressures by removing remaining tariffs on Canadian aluminum, steel and lumber.

“Construction companies have been burdened with cost increases of 20% per year or more since the start of 2021,” said Ken Simonson, the association’s chief economist. “Since contractors can rarely pass on increases to ongoing projects, these extreme price increases threaten the viability of many businesses. Unfortunately, the continuation of the war in Ukraine is likely to keep input costs high for many more months, if not longer.

The producer price index for new non-residential construction inputs – prices charged by producers of goods and service providers such as distributors and transportation companies – rose 2.7% from February to March and 21.5% over the last 12 months. By comparison, the construction index for new non-residential buildings – a measure of what contractors say they would charge to erect five types of non-residential buildings – rose 0.6% for the month and 17. 0% compared to the previous year. March was the 18th straight month in which the cost index rose more than the bid price index on a yearly basis, Simonson noted.

Prices rose faster than the 17% increase in bid prices for a wide range of inputs in the cost index. The diesel fuel price index jumped 63.8% year-over-year. The index of aluminum factory shapes jumped 43.7%. The steel products index climbed 42.9%. The plastic building products index rose 35.2% year-on-year.

Additionally, year-over-year increases topped 17% for indices covering freight trucking, which climbed 24.5%; asphalt and tar roofing and siding products, 22.6%; lumber and plywood, 20.9%; gypsum products, 20.8%; architectural coatings, 20.6%; and insulation materials, 17.4%.

Association officials said tariffs as high as 25% on steel, 18% on Canadian lumber and 10% on aluminum have compounded extreme price increases for those inputs. They urged the Biden administration to remove tariffs immediately to provide relief to employers struggling with rapidly rising material costs.

“Given the impact that inflation is already having on the economy, it makes no sense for the administration to continue to unnecessarily inflate the cost of key building materials,” said Stephen E. Sandherr, chief executive. from the Association. “Removing these tariffs will take some of the pricing pressure from employers struggling to control costs.”

Source: CAG

Comments are closed.