The Associated General Contractors of America is reporting that the producer price index for construction materials increased by 1.4 percent in April. For the past 12 months, material costs increased by 7.1 percent.
“Contractors have been clobbered for several months
by double-digit price hikes for diesel fuel, copper and steel products,” said
Ken Simonson, the association’s chief economist. “Worse, the price squeeze is
hitting many contractors while private demand remains weak, public demand is
shrinking and the amount they earn for most publicly funded projects is about
to be drastically cut.”
Simonson said the most extreme price
increase was for diesel fuel, which jumped 5.7 percent in April and 41.6
percent year-over-year. Prices for copper and brass mill shapes climbed 2.6
percent in April and 14.3 percent over last year, while steel mill product
prices increased 2.2 percent and 13 percent, respectively.
that prices for crude oil, iron and steel scrap, and copper futures-items that
usually indicate near-term price movements for diesel fuel, construction steel,
and copper wire and pipe-have slipped from their highs in recent weeks but
remain very volatile, Simonson suggested the worst may be over for now.
Meanwhile, construction employment has risen modestly for the past three months
and construction spending edged up in March according to government reports
last week. However, the economist cautioned that many contractors, especially
those working on public projects, are still facing cutbacks in work to bid on.
officials are urging Congress and the White House to enact infrastructure
spending bills and to repeal a law that will require all levels of government
to begin withholding 3 percent of payments to contractors by 2013.
lack of funding for transportation and water projects, combined with the
looming withholding of more than most contractors make on the average project,
threatens to force many firms out of business,” said Stephen E. Sandherr, the
association’s chief executive officer.