Material prices spike
| April 12, 2012
Despite relatively weak overall demand and stagnant project prices, the cost of construction materials jumped in March. Ken Simonson, chief economist, Associated General Contractors of America, cited increases including diesel fuel, up 3.5 percent for the month after rising 3.0 percent in February; gypsum products such as wallboard, up 2.2 percent after increasing 5.1 percent in February and 5.9 percent in January; and aluminum mill shapes, up 1.2 percent after a 1.9 percent rise the previous month. The overall producer price index for construction materials prices increased by 1.4 percent between February and March.
Although material prices rose, the amount contractors were able to charge declined by 0.2 percent for industrial construction and rose just 0.2 percent for new warehouse, office and school construction, says Simonson.
“Contractors are paying peak market prices for construction materials even as they charge bottom market prices to build new structures,” says Stephen E. Sandherr, the association’s chief executive officer. “Many firms won’t be doing much hiring if they have to continue to cope with higher costs, less income and little demand for work.”