The AEC Lens Alex Carrick, Chief Economist at ConstructConnect
Alex Carrick is Chief Economist for ConstructConnect. He is a frequent contributor to the Daily Commercial News and the Journal of Commerce. He has delivered presentations throughout North America on the Canadian, United States and world construction outlooks. A trusted and often-quoted source for … More » PPI Measures of Construction Material Costs Are Still Shouting WarningsJuly 21st, 2021 by Alex Carrick, Chief Economist at ConstructConnect
Article source: ConstructConnect This article focuses on the latest U.S. building material cost increases as laid out in the Producer Price Index data set compiled and published by the Bureau of Labor Statistics. The PPI series measures prices for goods as they leave the factory gate. They’re not necessarily as up-to-the-minute relevant as some other measures. For example, there have been sighs of relief in the marketplace because of recent perceived price softening in the forestry sector. The moderation relates to transactions on commodity exchanges covering ‘spot’ and ‘futures’ prices. Therefore, some easing may be imminent, and again especially relating to lumber and its byproducts, but there are still numerous cost hikes among other construction material inputs to raise an eyebrow or two. Prices for steel, aluminum, and copper products, along with gasoline and diesel fuel, have all been climbing significantly higher, to some extent under the cover of the more attention-grabbing advances in forestry products.
In any event, Table 1 shows the dilemma faced by contractors. In hopes of being awarded work, they’ve been keeping their bid prices low, while their expenses have been increasing alarmingly. Appearing below are 30 graphs and a detailed table. 28 of the graphs are in clusters of four each. The graphs and table feature the latest monthly updates of what has appeared before at ConstructConnect’s website. Recently, many of the slopes in the cluster graphs have taken on a steepness rarely, if ever, seen before. Graph 1: U.S. Construction Bid Prices vs Material Input Costs
Data source: Producer Price Index series (BLS).
Chart: ConstructConnect. Graph 2: U.S. Construction Material Cost Changes
From Producer Price Index (PPI) Series – June 2021 Data source: Bureau of Labor Statistics (BLS).
Charts: ConstructConnect. Graph Cluster 1 – Forestry Products: U.S. Construction Material Costs (1) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Graph Cluster 2 – Steel Products: U.S. Construction Material Costs (2) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Graph Cluster 3 – Cement: U.S. Construction Material Costs (3) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Graph Cluster 4 – Base Materials: U.S. Construction Material Costs (4) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Graph Cluster 5 – Energy Products: U.S. Construction Material Costs (5) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Graph Cluster 6 – Accessories & Arterial: U.S. Construction Material Costs (6) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Graph Cluster 7 – Equipment: U.S. Construction Material Costs (7) – From Producer Price Index (PPI) Series
The last data points are for June 2021.
Data source: U.S. Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, not seasonally adjusted (NSA).
Charts: ConstructConnect. Table 1: U.S. Producer Price Index (PPI) Results
% Change in the April 2021 Index from:
The ‘final demand’ indices (at top) reflect the prices paid by owners for the construction of projects. They include material, labor & markups.
The ‘service’, ‘commodity’ and ‘energy’ indices (in the middle section of the table) are based on ‘factory-gate’ sales prices. The ‘input’ indices (at bottom) reflect costs faced by contractors. They exclude capital investment (i.e., machinery & equipment), labor & imports. The ‘input’ indices are built up from the ‘service’ (design, legal, transport & warehousing, etc.) ‘commodity’ and ‘energy’ indices. Data source: Producer Price Index (PPI) series from Bureau of Labor Statistics (BLS).
Table: ConstructConnect. Category: ConstructConnect |