The producer price index for inputs to nonresidential construction—the prices charged by goods producers and service providers such as distributors and transportation firms—ticked down 0.1 percent from February to March. The downturn was driven by a 2.3 percent drop in energy inputs, while the index for goods other than energy and foods climbed 0.5 percent. The index for services declined 1.0 percent.
Price patterns for key construction inputs varied widely in March. Price changes for the month ranged from increases of 2.1 percent for liquid asphalt and 1.2 percent for steel mill products to a decrease of 7.0 percent for diesel fuel.
Despite the recent moderation, many inputs continued to post double-digit cost increases from a year ago. Prices jumped 17.0 percent year-over-year for cement, 14.5 percent for both concrete products and architectural coatings, and 14.1 percent for paving mixtures and blocks. Prices climbed by 11.8 percent for gypsum building products and for construction machinery and equipment, 10.6 percent for flat glass, and 10.5 percent for insulation materials.
Association officials said firms are struggling to source materials that comply with strict new Buy America Build America requirements. The new rules governing procurement for many federally funded infrastructure projects require products to not only be manufactured in the U.S., but from components that were sourced with raw materials mined in the U.S. Few materials, including even screws, meet the new requirements, making it hard for firms to estimate construction costs and scaring some away from bidding for fear of running afoul of the new requirements.
“At some point people are going to wonder why all these projects the administration has announced funding for aren’t moving forward,” said Stephen E. Sandherr, the association’s chief executive officer. “Many projects will have a hard time getting bidders who can find materials that comply with these unworkable new requirements.”
Source: AGC
