Construction material cost increases plague contractors

AGC of America
June 16, 2011
COMMERCIAL : TRENDS

Contractors suffered from a new round of price increases for key materials in May but were largely unable to pass their costs along to customers, according to an analysis of producer price index figures released June 14 by the Associated General Contractors of America. Association officials said the ongoing cost squeeze—a result of sluggish demand for construction—threatens to drive more construction employees and firms out of work unless public officials lower barriers to public and private investment.

Ken Simonson, the association's chief economist, noted that the producer price index for all construction materials increased by 0.9 percent in May and 7.5 percent over the past 12 months. The year-over-year figure has accelerated steadily for the past four months. Meanwhile, the price of finished buildings was flat in May and rose only 1.8 percent or less over the past year, depending on building type, according to a June 14 AGC release.

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