Materials Costs Rise at Record Pace

May 18, 2021 – According to Associated General Contractors Chief Economist Ken Simonson, the producer price index (PPI) for nonresidential building construction – a measure of the price that contractors say they would charge to build a fixed set of buildings – increased 1.2% from March and 2.3% year-over-year (y/y) since April 2020, while the PPI for material and service inputs to new nonresidential construction jumped 1.5% and 17.6%, respectively, the Bureau of Labor Statistics (BLS) reported on Thursday. An index that measures the price of goods inputs to all construction soared 2.0% for the month and 19.1% y/y, the largest y/y increase in the 35-year history of the series. AGC posted tables and charts showing PPIs relevant to construction. PPIs that contributed to the input increases include diesel fuel, which tumbled 8.0% in April but shot up 127% y/y; lumber and plywood, up 6.5% for the month and 86% y/y; steel mill products, 18% and 64%, respectively; copper and brass mill shapes, 0.2% and 49%; aluminum mill shapes, 7.5% and 20.5%; plastic construction products, 3.3% and 14%; gypsum products, 3.9% and 12%; truck transportation of freight, 0.5% and 9.2%; asphalt felt and coatings, 1.4% and 6.6%; and insulation materials, 0.1% and 5.2%.