Costs Outrun Bid Prices Again in March, BLS Finds; Some Delays Improve as Others Worsen

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Construction input costs outpaced bid prices again in March, according to Bureau of Labor Statistics (BLS) data posted on Wednesday. The producer price index (PPI) for material and service inputs to new nonresidential construction jumped 2.7% for the month and 21.5% year-over-year (y/y). The PPI for new nonresidential building construction—a measure of the price that contractors say they would bid to build a fixed set of buildings—increased 0.6% for the month and 17% y/y. March was the 18th-straight month in which the cost index rose more than the bid-price index on a year-over-year basis. Prices rose faster than the 17% increase in bid prices for a wide range of inputs in the cost index: diesel fuel, up 20% for the month and 64% y/y; aluminum mill shapes, 6.2% and 44%, respectively; steel mill products, down 4.9% in March but up 43% y/y; plastic construction products, up 1.5% and 35%, respectively; truck transportation of freight, 6.6% and 24.5%; asphalt and tar roofing and siding products, 1.6% and 23%; lumber and plywood, 5.1% and 21%; gypsum products, 1.5% and 21%; architectural coatings, 0.7% and 21%; and insulation materials, -0.1% and 17.4%. Bid prices, as measured by PPIs for new buildings, rose 0.5% for the month and 29% y/y for new warehouse construction; 0.3% and 18.5%, respectively, for industrial buildings; 0.8% and 17% for offices; 0.7% and 15% for health care buildings; and 0.3% and 13% for school buildings. PPI increases for new, repair, and maintenance work by subcontractors amounted to 0.8% for the month and 19% y/y for concrete contractors; 2.1% and 15%, respectively, for roofing; 1.0% and 12% for electrical; and 0.5% and 11.5% for plumbing contractors. AGC posted tables and graphs of construction PPIs. Numerous producers have implemented additional increases in the five weeks since BLS collected these prices on March 11.

Delays appear to improving in some sectors but worsening in others. There were reportedly 45 containerships waiting to unload at the ports of Los Angeles and Long Beach earlier this week, down from more than 100 around New Year’s. However, the decline is due in part to fewer ships leaving Shanghai, where factory production and freight movements have been curbed by a spike in coronavirus cases and a citywide lockdown. “Bank of America’s measure of trucking capacity available to shippers jumped last week to its highest level since June 2020, while its measure of shippers’ outlook for freight rates dropped sharply to the lowest level since July 2020,” the Wall Street Journal reported on Thursday. But a reader forwarded a notice from an Ohio-based aluminum extruding mill that its lead time was now 66-68 weeks, whereas the “lead time up until about a year ago was more like six weeks.” Readers are invited to send price and supply chain information to .

Seasonally adjusted construction employment in March topped the February 2020 level in 32 states, lagged in 16 states and the District of Columbia, and was flat in Nevada and Wyoming, according to AGC’s analysis of BLS data posted today. (February 2020 was the month in which employment peaked nationally before plunging during widespread shutdowns in March and April 2020.) Utah added the most construction jobs since February 2020 (15,000, 13.2%), followed by Tennessee (11,400, 8.6%) and Missouri (11,300, 8.8%). Utah also had the largest percentage gain, followed by South Dakota (12.1%, 2,900 jobs) and Idaho (12.0%, 6,600). New York shed the most construction jobs over 25 months (-29,600, -7.2%), followed by Texas (-15,300, -2.0%) and Pennsylvania (-14,200, -5.3%). The largest percentage losses were in New York, Pennsylvania, and North Dakota (-5.0%, -1,400 jobs). For the month, construction employment increased in 35 states, declined in 14 states and D.C., and was unchanged in Idaho. (BLS reports combined totals for mining, logging, and construction in D.C., Delaware, and Hawaii. Because there are few, if any, mining or logging jobs in these locations, AGC treats the levels and changes as solely construction employment).

On March 31, BLS posted an annual update for 2021 of data on employment and wages by occupation. The site includes “wages for over 400 occupations in construction,” according to an analysis the National Association of Home Builders posted on April 8. “Out of these, only 58 are construction trades. The other industry workers are in finance, sales, administration and other off-site activities….half of payroll workers in construction earn more than $49,070 [the median wage] and the top 25% make at least $75,820. In comparison, the U.S. median wage is $45,760, while the top quartile (top 25%) makes at least $68,590….The highest paid occupation in construction is Chief Executive Officers with [a median of] $162,390 per year….Among construction trades, elevator installers and repairers top the median wages list with [a median of] $98,600 a year, and the highest paid 25% making at least $120,950. Pile driver operators are next [, with a median of] $77,030 and top quartile earning at least $96,440. First-line supervisors of construction trades are third [, with median wages of $72,600 and top quartile] of $91,310. In general, construction trades that require more years of formal education, specialized training or licensing tend to offer higher annual wages. Median wages of construction and building inspectors are $61,360 and the wages in the top quartile of the pay scale exceed $78,940. Half of plumbers in construction earn over $59,810, with the top quartile making over $78,190. Electricians’ wages are similarly high.”

BLS on Monday posted a set of charts and commentary on “The Construction Industry: Characteristics of the Employed, 2003–20” that “examines the demographic and socioeconomic characteristics of construction industry workers, putting these characteristics in context by comparing them to those of workers overall.”

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