Submitted by the AGC.
With increases in materials costs and shortages continuing for a multitude of items, AGC posted a new update today of the Construction Inflation Alert, an eight-page document to inform owners, officials, and others about the range of materials cost, supply chain, and labor availability challenges contractors are experiencing. Investment research firm Thompson Research Group reported on Monday, based on its quarterly building products survey, “Additional price increases for early May are starting to come out in the +30% range” for wallboard. Both wallboard and “insulation industry plants are effectively running at full utilization….commercial roofing insulation remains very difficult to source. [Ceiling system/tile pricing is] largely up mid to high single digits….the flooring industry [is] seeing two price increases already in 2022.” Masonite International Corporation announced on Monday that it would raise door and frame prices 10-20%, effective June 6, with some items also subject to allocation. The Alabama Concrete Industries Association sent a letter on Tuesday, stating, “Ready mix producers in Alabama are experiencing unprecedented shortages of raw materials including cement,…aggregate, and sand. Of extreme importance is the cement shortage across Alabama and the southeast.” Readers are invited to send price and supply-chain information to firstname.lastname@example.org.
Delays appear to be hitting construction harder than other sectors. The Census Bureau today posted results from its weekly Small Business Pulse Survey, covering data collected March 28-April 3. Two-thirds (66%) of construction respondents reported domestic supplier delays, compared to 44% of all respondents; 31% of construction firms reported difficulty locating alternate domestic suppliers (vs. 22%); 22% of construction firms reported “production delays at this business” (vs. 14%); and 37% of construction firms reported delays in delivering/shipping to customers (vs. 24%). Nearly half (49%) of construction firms reported being “affected by availability of supplies of inputs used to provide goods or services,” vs. 32% of all respondents. In addition, 60% of construction firms (vs. 39%) reported a large increase in prices paid for goods and services now, compared to six months ago.
Construction employment, not seasonally adjusted, rose from February 2020–the pre-pandemic peak month nationally–to February 2022 in 209 (58%) of the 358 metro areas (including divisions of larger metros) for which the Bureau of Labor Statistics (BLS) posts construction employment data, fell in 109 (30%) and was unchanged in 40, according to an analysis AGC released on Wednesday. (BLS reports combined totals for mining, logging, and construction in most metro areas, to avoid disclosing data about industries with few employers.) Salt Lake City added the most construction jobs (5,100 combined jobs, 11%), followed by Jacksonville, Florida (4,800 construction jobs, 10%) and Nashville-Davidson-Murfreesboro-Franklin (4,000 combined jobs, 8%). Walla Walla, Wash. had the highest percentage gain (36%, 400 combined jobs), followed by Decatur, Ill. (32%, 900 combined jobs) and Lawrence-Methuen Town-Salem, Mass.-N.H. (24%, 800 combined jobs). New York City lost the most jobs (-25,500 combined jobs or -16%), followed by Houston-The Woodlands-Sugar Land (-23,400 construction jobs, -10%). Odessa, Texas had the largest percentage decline (-27%, -5,500 combined jobs), followed by Greeley, Colo. (-24%, -4,700 combined jobs) and Beaumont-Port Arthur, Texas (-22%, -4,700 combined jobs). From February 2021 to February 2022, construction employment increased in 298 areas (83%), decreased in 32 (9%), and held steady in 28. There was a new high for February in 79 areas and a new low in one area (Charleston, W. Va.), in series dating in most cases to 1990.
“The Dodge Momentum Index moved 4% higher in March” from an upwardly revised February reading,” Dodge Construction Network reported today. The index “is a monthly measure of the initial report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. In March, the commercial component of the Momentum Index rose 7%, while the institutional component fell by less than 1%….When compared to March 2021, the overall Momentum Index was 17% higher in March 2022. The institutional component was up 23%; the commercial component was up 14%….Nonresidential projects entering planning continue to be robust despite rising energy prices, higher material costs, and significant shortages of labor. While projects should continue to enter the pipeline, the lag from planning to groundbreaking has been growing and will likely result in a delayed impact on construction starts.”
“Economic activity in the services sector grew in March for the 22nd month in a row,” the Institute for Supply Management reported on Tuesday. Construction is among 17 out of 18 services sectors that reported growth in March, 18 that reported paying higher prices for materials and services, 16 that reported slower supplier deliveries, 15 that reported an increase in orders, 13 that reported increases in employment, and 11 that reported an increase in order backlogs. Items reported up in price that are significant for construction included aluminum products (4 months in a row), copper, diesel fuel (16 months), freight (11 months), lumber (3 months), oriented strand board (2 months), polyvinyl chloride (PVC) products (7 months), resin-based products, and steel products (15 months; also listed as down in price). Items listed in short supply included appliances, construction contractors, diesel, plastic pipe, resin-based products, and steel products).