According to Ken Simonson, chief economist for the Associated General Contractors of America (AGC), prices for diesel fuel, asphalt, steel and other materials have increased rapidly, “clobbering construction budgets.”
The producer price index (PPI), reported by the Bureau of Labor Statistics (BLS), surged 10.4% for inputs to construction industries over the past 12 months with the index for highway and street construction up 18.9% in that time span.
"Bad as those figures sound, the increases in asphalt and steel costs have been even worse since these prices were collected in mid-June," Simonson said. "In the first two weeks of July, asphalt prices have jumped by 40% in several parts of the country. Prices for rebar--steel used to reinforce concrete in highways, bridges and buildings--soared $200 per ton.
"Suppliers have been announcing price increases for many other products as well," he added. "Yesterday, two gypsum makers told contractors that wallboard prices would rise at double-digit rates in each of the next three months.
"Unless Congress passes additional funding in the next few weeks to keep highway construction funds flowing, many states will stop awarding contracts," Simonson said. "Other public agencies, as well as private owners, must adjust their budgets promptly to reflect the new price realities for construction."