Construction Input Costs Increase 12.6 Percent On Year

Nov 1, 2022

Nonresidential construction materials and services increased by 12.6 percent in September, when compared to the previous year.

However, compared to the prior month, it reflects a 0.2 percent decrease.

The information was brought to light by a report from the Associated General Contractors of America, which acknowledged the construction industry was experiencing a hardship due to inflation. Additionally, they speculated the new Buy America rules will further complicate the situation.

“Today’s price report shows that costs for construction continue to outpace those of other industries,” said Ken Simonson, AGC Chief Economist.“Furthermore, the steep runup in diesel prices in the last few weeks is likely to make projects still more expensive to complete.”

The prices placed on goods and services by those that make them available decreased by 0.2 percent from August to September, which made the 8.5 percent yearly increase fall slightly from last month.

Of concern is the cost of diesel fuel, which saw a $0.39 per gallon increase. This push the price of diesel up $1.64 or 45.7 percent on the year. Construction is especially sensitive to the cost of diesel because it is the fuel needed transport goods and power heavy equipment. 

Additionally, the producer price index saw double-digit increases. Diesel fuel leaped by 65.9 percent, including 11.7 percent rise in September. The report noted an unusually large year-over-year increase in the price indexes for gypsum products at 18.4 percent; plastic construction products, 17.9 percent; truck transportation of freight, 16.3 percent; and insulation products, 13.4 percent.

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