Contractors feel the squeeze as rising costs continue to outpace building prices

Construction costs again outpaced other producer prices in June, but contractors remained unable to recoup the costs through higher bid prices, according to an analysis of producer price index figures releasedJuly 14by the Associated General Contractors of America. Association officials said the ongoing cost squeeze will put new pressure on construction firms to reduce staff and possibly close.

"Despite a one-month dip in the prices of some key materials in June, construction costs rose on a year-over-year basis at the highest rate since 2008," said Ken Simonson, the association's chief economist. "Worse, prices are rising amid continued layoffs and construction spending levels that hit an 11-year low in May."

Simonson noted that the producer price index for all construction materials inched down 0.1 percent in June but increased 8.3 percent over the past 12 months, whereas the index for finished goods fell 0.7 percent for the month (0.4 percent, seasonally adjusted) and climbed 7.0 percent over 12 months. Meanwhile, the price of finished buildings was unchanged in June and rose only 2.0 percent or less over the past year, depending on building type, according to AGC.

Read the full AGC release...