US construction materials prices rise again

US contractors were squeezed by higher input costs in February after the price index for construction products rose +0.9% month-on-month, compounding a +0.4% rise in January, according to data from the Associated General Contractors of America (AGC).

The price of diesel fuel increased +3% month-on-month in February, while the price of wallboard and other gypsum products was up +5.1% for the month, following a +5.9% rise in January. The cost of copper and brass mill shapes was up +5.9% month-on-month, steel mill products were priced +0.6% higher and paving mixtures and blocks were up +2.5%.

AGC chief economist Ken Simonson said the rise in prices threatened to put contractors out of business and leave public projects underfunded unless materials could be ordered before prices jumped further.

"Contractors had finally begun to cover the modest increases of the last few months but now many of them are facing increases they may not be able to afford, given the industry's meagre margins," Mr Simonson said.

Mr Simonson also highlighted the fact that bid prices had remained stagnant in February. The price index for finished non-residential buildings - which is used to measure contractors' bids - was unchanged in February for warehouse, school and office buildings and was down -0.2% for industrial buildings.

The AGC said construction companies were competing fiercely for a limited amount of work and matters had been made more difficult by the fact that Congress has yet to pass long term infrastructure programmes such as the Highway Funding Bill.

AGC CEO Stephen Sandherr said, "With contractors getting squeezed by materials prices, it would certainly be helpful for Congress to enact long-term infrastructure and tax measures. Getting the House to pass the Senate-backed transportation bill, for example, would help a lot of firms struggling to survive."