Simonson Says

April 18, 2022 – Ken Simonson, Associated General Contractors economist, noted that construction input costs outpaced bid prices again in March, according to Bureau of Labor Statistics (BLS) data. The producer price index (PPI) for material and service inputs to new nonresidential construction jumped 2.7% for the month and 21.5% year-over-year (y/y). The PPI for new nonresidential building construction – a measure of the price that contractors say they would bid to build a fixed set of buildings – increased 0.6% for the month and 17% y/y. March was the 18th-straight month in which the cost index rose more than the bid-price index on a y/y basis. Prices rose faster than the 17% increase in bid prices for a wide range of inputs in the cost index: diesel fuel, up 20% for the month and 64% y/y; aluminum mill shapes, 6.2% and 44%, respectively; steel mill products, down 4.9% in March but up 43% y/y; plastic construction products, up 1.5% and 35%, respectively; truck transportation of freight, 6.6% and 24.5%; asphalt and tar roofing and siding products, 1.6% and 23%; lumber and plywood, 5.1% and 21%; gypsum products, 1.5% and 21%; architectural coatings, 0.7% and 21%; and insulation materials, -0.1% and 17.4%. Bid prices, as measured by PPIs for new buildings, rose 0.5% for the month and 29% y/y for new warehouse construction; 0.3% and 18.5%, respectively, for industrial buildings; 0.8% and 17% for offices; 0.7% and 15% for health care buildings; and 0.3% and 13% for school buildings. PPI increases for new, repair, and maintenance work by subcontractors amounted to 0.8% for the month and 19% y/y for concrete contractors; 2.1% and 15%, respectively, for roofing; 1.0% and 12% for electrical; and 0.5% and 11.5% for plumbing contractors. 

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