By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE
Although the price of copper and brass has decreased slightly, the cost of gypsum, concrete and diesel fuel are still headed upward, according to the Associated General Contractors of America.
AGC Chief Economist Ken Simonson says numbers reported on July 14 show that nonresidential construction costs – material and services – rose 1.1 percent for the month of June.
“Some materials prices have fallen recently, but others appear headed for further increases,” he said. “In addition, the supply chain remains fragile and persistent difficulties filling job openings mean construction costs are likely to remain elevated despite declines in some prices.”
The producer price index for inputs to nonresidential construction – the prices charged by goods producers and service providers, such as distributors and transportation firms – jumped 1.1 percent from May to June 2022 and increased a total of 16.8 percent since June 2021. Meanwhile, the index for new nonresidential building construction – a measure of what contractors calculate they would charge to erect five types of commercial/industrial buildings – climbed by 0.5 percent from May to June this year and a cumulative 19.8 percent over the past 12 months.
Add to that the soaring cost of diesel fuel, which jumped 14.1 percent in June and has more than doubled over the past 12 months, and you have a recipe for continued price pressure on the cost of future construction projects, according to the AGC.
“The more materials prices increase, the harder it will be for public officials to build new schools, roads and other infrastructure,” said AGC CEO Stephen Sandherr, whose organization is urging the Biden administration to remove remaining tariffs on a range of construction materials. The AGC is also asking public leaders at all levels to do what they can to help unclog backed-up supply chains. “Taking steps to address rising materials prices will help construction employers and taxpayers alike.”