Producer Price Index for Construction Materials, Services Rises 1.1%

The price of materials and services used in nonresidential construction increased 1.1% from July to August, driven by an extreme jump in diesel fuel costs, according to an analysis by the Associated General Contractors of America. Association officials noted that most other commodity prices were subdued but said their newly released survey showed contractors continue to experience widespread problems finding qualified workers and the costs associated with those shortages.

The producer price index for diesel fuel, which covers the selling price at the terminal rack or refinery, soared 34.6% from mid-July to mid-August, the largest one-month jump since 1990. Simonson noted that retail diesel prices have continued rising since then and have climbed 77 cents per gallon in the past 10 weeks.

The 1.1% monthly increase in construction input costs was the largest since January. In contrast, the index for new nonresidential building construction — a measure of the bid prices contractors said they would charge to erect a set of new structures — edged up just 0.2% in August. Both indexes posted relatively mild year-over-year changes: 0.1% for inputs and 4% for bids.

Prices for most major construction inputs other than fuel were stable or declined in August. Indexes for cement and architectural coatings such as paint were flat. There were decreases of 0.2% in the index for plastic construction products, 0.5% steel mill products and 0.4% for gypsum building materials.

The association’s annual workforce survey, conducted with Autodesk, found that 85% of respondents reported having job openings for hourly craft workers or salaried workers. Of firms with openings, 88% reported difficulty filling craft positions and 86% reported the same for salaried openings. Sixty-one percent of firms that experienced project delays attribute them to a shortage of workers.