The average price of construction materials increased by 7.4 percent from September 2017 to September this year, trades groups reported on Wednesday.
Both the Associated General Contractors of America and the Associated Builders and Contractors said the increase came amid increasing fuel prices and trade tensions between the U.S. and other countries. Ken Simonson, AGC chief economist, noted that in the same period that saw materials prices go up by 7.4 percent on average, a separate index gauging what contractors say they will charge for projects rose by only 3.5 percent.
“Contractors are paying more for the materials they use and workers they employ but aren’t able to pass most of those new costs on to their clients,” Simonson said.
From September to 2017 to September this year, diesel fuel rose by 29.3 percent in price, steel pipes and tubes by 22.1 percent, fabricated metal structures by 11.7 percent, asphalt-paving mixtures by 11.2 percent and aluminum mill shapes by 10.7 percent.
Looking at month-to-month data, the ABC noted that the average price of construction materials had dropped from July to August but rose again from August to September.
“Today’s data are consistent with the view that the prior month data were anomalous,” said Anirban Basu, ABC chief economist. “Nonresidential contractors should continue to expect both rising material and human capital costs going forward. Understanding these dynamics is, of course, particularly salient to the daily lives of estimators, who arguably have today’s most difficult construction job.”
Basu noted that the price of crude oil rose by 47 percent between September 2017 and September this year.
“There is also the matter of trade tensions, including those involving key construction materials like steel and softwood lumber,” he said. “While new trade agreements have been signed with the likes of Mexico, South Korea and Canada, certain trade issues linger, including U.S. tariffs imposed on foreign steel and aluminum for reasons ostensible related to national security.”Follow @TDR_WLJDan