The cost of construction materials dipped from November to December, but experienced a slight increase over the past year, according to an analysis of federal figures released by AGC.
he cost of construction materials dipped from November to December, but experienced a slight increase over the past year, according to an analysis of federal figures released by AGC.
Association officials said the price decline was likely to be temporary, noting that the vast majority of contractors predict materials prices will rise in 2013.
“Moderate price swings for several materials last year gave contractors some breathing room, but future price spikes could push many firms into the red,” said Ken Simonson, chief economist for AGC. “Contractors still have not recovered from the cost increases they had to absorb in 2010 and 2011.”
For the 12 months ending in December, the producer price index for all construction inputs rose 1.3 percent, similar to what contractors are estimated to charge for new nonresidential buildings, Simonson noted.
Simonson attributed the mild annual materials price increase to moderation in fuel, metals and paving prices, which offset steeper jumps in several materials used in residential building.
AGC officials noted that 90 percent of contractors surveyed for the group’s 2013 Construction Hiring and Business Outlook predict materials prices will increase in 2013. They added that an increasing number of contractors will try to pass on some of those price increases to customers this year, noting that 29 percent report they will try to raise bid prices this year, compared to only 15 percent that raised prices in 2012.
“The days of low bids and relatively inexpensive construction costs are clearly numbered,” said Stephen E. Sandherr, AGC’s CEO. “While the construction industry is still facing some difficult headwinds, there is a clear sense that the industry is slowly turning a corner.”