The cost of goods used in construction jumped in April at the fastest year-over-year rate since 2011, with ongoing increases for a wide range of building materials, including many that are subject to proposed tariffs that could drive prices still higher and cause scarcities, according to a recent analysis by the Associated General Contractors of America of Labor Department. Association officials said that the new data indicates many firms are already being squeezed by higher materials prices that they are unable to pass along to their customers.
The producer price index for inputs to construction industries, goods—a measure of all materials used in construction projects including items consumed by contractors, such as diesel fuel—rose 1.0 percent in April alone and 6.4 percent over 12 months. The year-over-year increase was the steepest since 2011, the economist noted. Meanwhile, the producer price index for nonresidential construction—a measure of what contractors say they would charge to put up a mix of school, office, warehouse, industrial and health care buildings—increased 1.1 percent for the month and 4.2 percent year-over-year.
From April 2017 to April 2018, the producer price index jumped by 11.9 percent for aluminum mill shapes, 11.0 percent for lumber and plywood and 7.4 percent for steel mill products. The U.S. has been in a dispute with Canada over lumber imports, has imposed tariffs on several types of steel and has announced or recently imposed additional tariffs—not reflected in the April price index—on steel, aluminum and numerous Chinese construction products.
Other construction inputs that rose sharply in price from April 2017 to April 2018 include diesel fuel, 41.6 percent; copper and brass mill shapes, 10.5 percent; gypsum products, 7.5 percent; ready-mix concrete, 6.9 percent; and truck transportation of freight, 6.0 percent.