Posted on Jun 5, 2021
Proliferating materials price increases and supply chain disruptions squeeze contractors and...
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The cost of goods and services used in construction accelerated further in April as more items logged double-digit increases over the past year, according to an analysis by the Associated General Contractors of America of government data released today. Meanwhile, nonresidential contractors struggled with delays in receiving materials and intensifying competition that limited their ability to pass on higher costs. Association officials urged the Biden administration to quickly roll back tariffs and quotas on imported construction materials that are adding to costs and availability problems.
“Today’s producer price index report—bad though it is—actually understates the severity of the problems contractors are experiencing,” said Ken Simonson, the association’s chief economist. “Many items have posted even steeper price increases since the data for this report were collected in mid-April, while lead times for producing goods and delivery times to distributors and worksites have grown ever longer and less certain.”
Prices for materials used in construction jumped 19.7% from April 2020 to last month. That was by far the largest increase in the 35-year history of the series, Simonson said. A series that includes services as well as goods purchased by contractors increased nearly as much, 19.1%. Meanwhile, the producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose only 2.3% over the past 12 months, as competition for a shrinking pool of new projects forced contractors to absorb most of the increases.
Items with especially steep price increases over the past year ranged from lumber to metals to plastics. The producer price index for lumber and plywood soared 85.7% from April 2020 to last month. The index for steel mill products climbed 67%, while the index for copper and brass mill shapes rose 49% and the index for aluminum mill shapes increased 20.5%. The index for plastic construction products rose 14.2% amid growing scarcity of items such as PVC pipe, vinyl siding and moisture barriers, and resins used in paints and adhesives. The index for gypsum products such as wallboard climbed 12.1%.
Association officials said some of the supply chain problems have resulted from the pandemic or one-time events like the freeze in Texas last February that damaged plants producing inputs for construction plastics. But they added that federal policies, particularly tariffs and quotas on key building materials like lumber, steel, and aluminum have exacerbated the price spikes, supply shortages, and delivery delays. They urged the administration to end those import obstacles and explore ways to help uncork supply-chain bottlenecks.
“The Biden administration must address these unprecedented lumber and steel costs and broader supply-chain woes or risk undermining the economic recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “Without tariff relief and other measures, vital construction projects will fall behind schedule or be canceled.”
View producer price index data. View chart of gap between input costs and bid prices. View AGC’s Construction Inflation Alert.
The cost of goods and services used in construction accelerated further in April as more items logged double-digit increases over the past year, according to an analysis by the Associated General Contractors of America of government data released today. Meanwhile, nonresidential contractors struggled with delays in receiving materials and intensifying competition that limited their ability to pass on higher costs. Association officials urged the Biden administration to quickly roll back tariffs and quotas on imported construction materials that are adding to costs and availability problems.
“Today’s producer price index report—bad though it is—actually understates the severity of the problems contractors are experiencing,” said Ken Simonson, the association’s chief economist. “Many items have posted even steeper price increases since the data for this report were collected in mid-April, while lead times for producing goods and delivery times to distributors and worksites have grown ever longer and less certain.”
Prices for materials used in construction jumped 19.7% from April 2020 to last month. That was by far the largest increase in the 35-year history of the series, Simonson said. A series that includes services as well as goods purchased by contractors increased nearly as much, 19.1%. Meanwhile, the producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose only 2.3% over the past 12 months, as competition for a shrinking pool of new projects forced contractors to absorb most of the increases.
Items with especially steep price increases over the past year ranged from lumber to metals to plastics. The producer price index for lumber and plywood soared 85.7% from April 2020 to last month. The index for steel mill products climbed 67%, while the index for copper and brass mill shapes rose 49% and the index for aluminum mill shapes increased 20.5%. The index for plastic construction products rose 14.2% amid growing scarcity of items such as PVC pipe, vinyl siding and moisture barriers, and resins used in paints and adhesives. The index for gypsum products such as wallboard climbed 12.1%.
Association officials said some of the supply chain problems have resulted from the pandemic or one-time events like the freeze in Texas last February that damaged plants producing inputs for construction plastics. But they added that federal policies, particularly tariffs and quotas on key building materials like lumber, steel, and aluminum have exacerbated the price spikes, supply shortages, and delivery delays. They urged the administration to end those import obstacles and explore ways to help uncork supply-chain bottlenecks.
“The Biden administration must address these unprecedented lumber and steel costs and broader supply-chain woes or risk undermining the economic recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “Without tariff relief and other measures, vital construction projects will fall behind schedule or be canceled.”
View producer price index data. View chart of gap between input costs and bid prices. View AGC’s Construction Inflation Alert.
Proliferating materials price increases and supply chain disruptions squeeze contractors and...
Posted from bdcnetwork.comPosted in these groups: 
Construction
Economics
Construction Economics
Posted 3 y ago
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Watched one report that showed 2 sides of the argument. One contractor claimed it was the mills that were price gouging. Then a mill owner came on and said the problem lay with government regulations. Not sure how that applies.
Until the inevitable crash, this is good for my home value. We were building very rapidly here in Rapid City. Now it has slowed down to a crawl.
Until the inevitable crash, this is good for my home value. We were building very rapidly here in Rapid City. Now it has slowed down to a crawl.
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SFC (Join to see)
Good comments Stan. With all the money we are printing and putting into circulation, I believe everybody is price gouging. It will go bust as you say, but that won't happen until the next administrating once all this free money dries up. MHO
On the regulations: Usually the more rules there are the more cost there is to construct something. I remember when I first started working for PennDOT a rough estimate to construct a mile of interstate highway was one million dollars. With all the environmental considerations now you would be lucky to get a mile of interstate highway designed for a million dollars. Don't get me wrong many of these considerations are worth it, but many are not. Too many people who don't understand the cause and effect have the "want can it hurt" attitude with extra requirements. I won't go into scripture and verse because I know you understand the economics involved.
On the regulations: Usually the more rules there are the more cost there is to construct something. I remember when I first started working for PennDOT a rough estimate to construct a mile of interstate highway was one million dollars. With all the environmental considerations now you would be lucky to get a mile of interstate highway designed for a million dollars. Don't get me wrong many of these considerations are worth it, but many are not. Too many people who don't understand the cause and effect have the "want can it hurt" attitude with extra requirements. I won't go into scripture and verse because I know you understand the economics involved.
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Little thing called the pandemic. Had we had a previous POTUS who had actually read the job description of his job ...........................................
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SFC (Join to see)
Hate is no way to go through life. I like to stick with the facts: Our previous President got us vaccine in record time, and in quantities to make a difference. That's why all the states are opening up now. I could explain more but I know it would fall on deaf ears. This wasn't even really a political article, why did you have to go right to it? No need to answer. We know.
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SFC (Join to see)
Prices for materials used in construction jumped 19.7% from April 2020 to last month. That was by far the largest increase in the 35-year history of the series, Simonson said. A series that includes services as well as goods purchased by contractors increased nearly as much, 19.1%. Meanwhile, the producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose only 2.3% over the past 12 months, as competition for a shrinking pool of new projects forced contractors to absorb most of the increases.
Items with especially steep price increases over the past year ranged from lumber to metals to plastics. The producer price index for lumber and plywood soared 85.7% from April 2020 to last month. The index for steel mill products climbed 67%, while the index for copper and brass mill shapes rose 49% and the index for aluminum mill shapes increased 20.5%. The index for plastic construction products rose 14.2% amid growing scarcity of items such as PVC pipe, vinyl siding and moisture barriers, and resins used in paints and adhesives. The index for gypsum products such as wallboard climbed 12.1%.
Association officials said some of the supply chain problems have resulted from the pandemic or one-time events like the freeze in Texas last February that damaged plants producing inputs for construction plastics. But they added that federal policies, particularly tariffs and quotas on key building materials like lumber, steel, and aluminum have exacerbated the price spikes, supply shortages, and delivery delays. They urged the administration to end those import obstacles and explore ways to help uncork supply-chain bottlenecks.
“The Biden administration must address these unprecedented lumber and steel costs and broader supply-chain woes or risk undermining the economic recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “Without tariff relief and other measures, vital construction projects will fall behind schedule or be canceled.”
Prices for materials used in construction jumped 19.7% from April 2020 to last month. That was by far the largest increase in the 35-year history of the series, Simonson said. A series that includes services as well as goods purchased by contractors increased nearly as much, 19.1%. Meanwhile, the producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose only 2.3% over the past 12 months, as competition for a shrinking pool of new projects forced contractors to absorb most of the increases.
Items with especially steep price increases over the past year ranged from lumber to metals to plastics. The producer price index for lumber and plywood soared 85.7% from April 2020 to last month. The index for steel mill products climbed 67%, while the index for copper and brass mill shapes rose 49% and the index for aluminum mill shapes increased 20.5%. The index for plastic construction products rose 14.2% amid growing scarcity of items such as PVC pipe, vinyl siding and moisture barriers, and resins used in paints and adhesives. The index for gypsum products such as wallboard climbed 12.1%.
Association officials said some of the supply chain problems have resulted from the pandemic or one-time events like the freeze in Texas last February that damaged plants producing inputs for construction plastics. But they added that federal policies, particularly tariffs and quotas on key building materials like lumber, steel, and aluminum have exacerbated the price spikes, supply shortages, and delivery delays. They urged the administration to end those import obstacles and explore ways to help uncork supply-chain bottlenecks.
“The Biden administration must address these unprecedented lumber and steel costs and broader supply-chain woes or risk undermining the economic recovery,” said Stephen E. Sandherr, the association’s chief executive officer. “Without tariff relief and other measures, vital construction projects will fall behind schedule or be canceled.”
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SFC Randy Hellenbrand
Thank trumpski and the GOP for mismanaging everything except billionaire portfolios.
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