According to an analysis released by the Associated General Contractors of America (AGC), construction materials prices spiked in the month of March. As a result, construction firms have to pay more for key materials, which creates more problems for contractors as the demand for construction remains weak.
Some of the materials with increased prices include diesel fuel (3.5 percent), gypsum products (2.2 percent), and aluminum mill shapes (1.2 percent). While these price increases appear to be generally small in size, they come after continuing price increases from the previous couple of months. Between February and March, the overall price index for construction materials increased by 1.4 percent, following a 0.9 percent increase between January and February.
Although the costs of materials have increased, the amount that contractors are able to charge for completed construction projects remained relatively stagnant. For example, the amount contractors charged for new industrial building construction decreased 0.2 percent, while the amount charged for new warehouse construction and new office construction increased by only 0.2 percent. The amount charged for new school construction rose by only 0.1 percent.
“Contractors are paying peak market prices for construction materials even as they charge bottom market prices to build new structures,” said Stephen E. Sandherr, the association’s chief executive officer. “Needless to say, 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.”
Click here to read the press release from AGC.