Contractors Face More Pressure From High Material Prices

Abstract

The Associated General Contractors of America report says construction input prices were up 1.1% in June from May, and rose 16.8% from June 2021. "Some materials prices have fallen recently but others appear headed for further increases," said Ken Simonson, AGC chief economist, in a statement. "Since these prices were collected, producers of gypsum, concrete, and other products have announced or implemented new increases. In addition, the supply chain remains fragile and persistent difficulties filling job openings mean construction costs are likely to remain elevated despite declines in some prices."Construction input prices tracked by the Associated Builders and Contractors jumped 1.9% in June compared to the previous month, and are up 20.1% year-over-year. "It's no secret that contractors and their customers have been walloped by massive increases in construction materials prices," said ABC chief economist Anirban Basu. While the effects of higher input prices were still being felt in June, the most recent data show that "Key commodity prices have declined, so it may be possible we have achieved peak inflation," he said. Concerns Voiced to Congress The effects of higher material prices and broader worries linked to the impact of inflation prompted some industry officials to voice complaints on Capitol Hill.The materials cost hikes continue to impact projects funded by the Infrastructure Investment and Jobs Act, said state and local public officials and industry executives speaking at a July 14 roundtable discussion held by Republican members of the House Transportation and Infrastructure Committee. "Fuel prices have nearly tripled this past year, which is driving every cost for the materials we produce."Committee Democrats did not respond to a request for comment from ENR about the Republicans' meeting.