The cost of construction materials is continuing to go up, at least according to the Associated General Contractors of America.
The AGC found that the prices for materials used in construction jumped by 0.6 percent in October and 4.8 percent overall during the past 12 months, while the price index for finished buildings remained flat.
“As if declining demand and dramatic layoffs weren’t enough, the construction industry also has to pay more for key materials while charging the same for finished projects,” said Ken Simonson, the association’s chief economist. “This squeeze is likely to force firms to shut their doors, compounding the already staggering 17.3 percent unemployment rate for the sector.”
Simonson noted that prices in October soared for a range of key construction materials: The price of diesel fuel is up 7.2 percent since September and 20 percent since October 2009. Copper and brass mill shapes are up 5.4 percent for the month and 15 percent for the year. The price of steel mill products is up 1.4 percent since September and 12 percent over the past 12 months.
Prices for some construction materials, however, remained flat or declined slightly this past month, Simonson added. Concrete prices were unchanged from the previous month and down 0.4 percent from the previous year.
Simonson predicted that contractors will be vulnerable to sudden price spikes in multiple materials in 2011 as the U.S. and foreign economies gradually recover.
“Unfortunately, demand for construction will likely remain weak for several more months, exacerbating the price squeeze that has already taken a toll on many firms and far more workers,” he said.