Construction costs climbed again in March, with 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 an analysis by the Associated General Contractors of America of Labor Department data released today. Association officials warned that tariffs on some items might lead to project delays and cancellations if supplies become unobtainable or too expensive for current budgets.
鈥淧rices increased for many items in March, even before tariffs announced for steel, aluminum and many items imported from China have taken effect,鈥 said the association鈥檚 chief economist, Ken Simonson. 鈥淪teel service centers and other suppliers are warning there is not enough capacity at U.S. mills or in the trucking industry to deliver orders on a timely basis. Thus, contractors are likely to experience still higher prices as well as delivery delays in coming months.鈥
The producer price index for inputs to construction industries, goods鈥攁 measure of all materials used in construction projects including items consumed by contractors, such as diesel fuel鈥攔ose 0.8 percent in March alone and 5.8 percent over 12 months. The year-over-year increase was the steepest since 2011, the economist noted.
鈥淢any items contributed to the latest round of increases,鈥 Simonson observed. 鈥淢oreover, today鈥檚 report only reflects prices charged as of mid-March. Since then, some tariffs have taken effect, many others have been proposed, and producers of steel and concrete have implemented or announced substantial additional increases.鈥
From March 2017 to March 2018, the producer price index jumped by 13.7 percent for lumber and plywood, 11.4 percent for aluminum mill shapes, and 4.9 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鈥攏ot reflected in the March price index鈥攐n steel, aluminum and numerous Chinese construction products.
Other construction inputs that rose sharply in price from March 2017 to March 2018 include diesel fuel, 39.7 percent; copper and brass mill shapes, 11.2 percent; gypsum products, 8.4 percent; and plastic construction products, 5.8 percent. In addition, concrete and other suppliers announced significant price hikes that were due to take effect in April.
Construction officials said the tariffs that have been announced have already triggered a surge of orders that mills say they cannot fill on a timely basis, which will create budget problems, delays and possibly cancellations for infrastructure and other public projects. They said adequate funding of infrastructure would be a better way to foster demand for domestic steel and aluminum without harming contractors.
鈥淭ariffs will harm contractors that are currently working on projects for which they have not bought materials and will disrupt budgets for future construction,鈥 said Stephen E. Sandherr, the association鈥檚 chief executive officer. 鈥淭he best way to help the U.S. steel and aluminum sector is to continue pushing measures, like regulatory reform and new infrastructure funding, that will boost demand for their products as the economy expands.鈥
View producer price indexes for construction.
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