Construction Materials Prices Down in June: AGC

July 16, 2012

The prices of a range of key construction materials decreased for the second consecutive month in June and inched up by just 0.5 percent from a year earlier, according to an analysis of producer price index figures by the Associated General Contractors of America.

Meanwhile, the amount contractors charge to construct projects was virtually unchanged for the month and rose only between 3.2 and 4.4 percent from a year ago.

“Contractors are finally seeing sustained relief from the outsized cost increases that buffeted them last year,” said Ken Simonson, the association’s chief economist. “The half-percent rise in the producer price index for construction inputs from June 2011 to June 2012 was the smallest year-over-year swing since December 2009.”

Simonson observed that falling prices for a variety of key construction materials contributed to the mild overall increase.

  • Diesel fuel: -9.0 percent in May; -10.7 percent from 2011.
  • Copper and brass mill shapes: -4.1 percent in June; -12.6 vs. 2011
  • Aluminum mill products: -0.5 percent in June, -9.2 percent vs. 2011
  • Steel mill products: -1.3 percent in June; -3.2 percent vs. 2011.
  • Plastic construction products: -0.4 percent in June; +1.9 percent vs. 2011.
  • Gypsum products: +1.1 percent in June, +13.2 percent vs. 2011
  • Asphalt paving: +1.2 percent in June, +6.6 percent vs. 2011.

The price indexes for finished nonresidential buildings, which measure what contractors estimate they would charge to put up new structures, mostly held steady in June and rose modestly year-over-year, Simonson noted. The index for new industrial buildings posted a rise of 0.1 percent in June and 3.2 percent over 12 months. The index for new office construction was flat for the month and up 3.4 percent for the year. The price for new warehouse construction also stayed level in June; that index rose 4.2 percent from June 2011. The index for new school construction was up 0.1 percent for the month and 4.4 percent for the year.

“A noticeable but uneven pickup in U.S. construction activity, along with sluggish global economic growth, should keep these price trends in place for a few more months,” Simonson predicted. “Private owners and public agencies with money to spend on projects would do well to get started now, before the next price spike.”