August 16, 2021 – According to Ken Simonsen, chief economist at Associated General Contractors, construction materials costs continued to outstrip bid prices in the 12 months ending in July despite a recent drop in lumber and copper prices. The producer price index (PPI) for new nonresidential building construction – a measure of the price that contractors say they would charge to build a fixed set of buildings – increased 1.7% from June and 4.4% year-over-year (y/y) since July 2020, while the PPI for material and service inputs to construction industries climbed 0.9% and 25.6%, respectively, the Bureau of Labor Statistics (BLS) reported on Thursday. Numerous inputs rose at double- and even triple-digit y/y percentage rates. The PPI for steel mill products soared 11% for the month and 109% y/y; diesel fuel, 4.0% and 82%, respectively; lumber and plywood, -16% in July but up 57% y/y; copper and brass mill shapes, -1.4% and 49%, respectively; aluminum mill shapes, 1.5% and 33%; plastic construction products, 4.5% and 27%; gypsum products, 2.6% and 22%; truck transportation of freight, 0.6% and 14%; insulation materials, -0.1% and 12%; and asphalt felt and coatings, 1.1% and 10%.