Construction materials prices spike in March; bid levels remain stagnant

The cost of construction materials jumped in March, even as the amount contractors charge to complete projects remained stagnant, according to an analysis of producer price index figures released, April 12, by the Associated General Contractors of America. Association officials noted that the spike in materials prices continues despite relatively weak overall demand for construction, and cautioned that current market conditions could force some firms out of business.

“Price shocks for a number of key construction materials may have caught contractors by surprise in a period when overall inflation remained very moderate,” said Ken Simonson, chief economist, in a release. “Even though the increases are generally small compared to the high levels of last March, contractors have not been able to pass along these new costs, putting firms at risk of insolvency.”

Simonson cited increases in March for diesel fuel, up 3.5 percent for the month after rising 3.0 percent in February, and aluminum mill shapes, up 1.2 percent after a 1.9 percent rise the previous month, as particular problems. Overall, the producer price index for construction materials prices increased by 1.4 percent between February and March, following a rise of 0.9 percent from January to February.

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