Charts Give Snapshot of 5-Year Construction Material Inflation Trends

You know the price of construction inputs have risen dramatically. But when displayed in chart form and juxtaposed with the general consumer price index (CPI) the price increases of diesel asphalt steel and more seem even more alarming. AGC of America Economist Ken Simonson has prepared easy-to-read charts showing material inflation from 2003 through June 2008. To view them click PPI Charts.

Also AGC of America has compiled information on the soaring cost of asphalt including effects on owners and contractors and information on price adjustment clauses on the construction economics section. Click AGC Asphalt Resource Center.

Inflation-related excerpts from Simonsons recent Data Digest (for complete issues of Data Digest and other data-and-analysis products from AGC of America click AGC Construction Economics):

The producer price index (PPI) for finished goods rose 1.6% in June not seasonally adjusted (1.8% seasonally adjusted) and 9.2% over 12 months the Bureau of Labor Statistics (BLS) reported on Tuesday. The PPI for inputs to construction industries which measures changes in prices of all types of construction materials plus diesel fuel and other items consumed during construction rose 1.8% over the month and 10% over 12 months. By segment the largest increases were for inputs to highways and streets (2.9% 19%) followed by other heavy construction (2.5% 16%) nonresidential buildings (1.7% 10%) multi-unit residential (1.5% 7.7%) and single-unit residential (1.3% 5.9%). Highway costs soared because of huge increases in the PPIs for commodities such as diesel fuel (5.7% 85%) steel mill products (8.1% 30%) and asphalt paving mixtures and blocks (6.7% 17%). There were moderate increases in the PPIs for concrete products (0.7% 3.8%) and plastic construction products (0.8% 2.8%). Building costs were held down by falling PPIs for gypsum products (-0.4% -13.8%) insulation materials (-0.3% -4.6%) copper and brass mill shapes (-4.4% -0.9%) brick and structural clay tile (-0.5% -0.8%) and lumber and wood products (up 0.9% in June but down 2.8% over 12 months). In a sign that contractors and subcontractors may be cutting their profit margins PPIs for finished buildings showed modest changes: new warehouse construction (0 4.2%) schools (1.6% 3.4%) office and industrial buildings (both -0.1% 3.1%).

Prices for asphalt are leaping and some states also report shortages of either asphalt or the petroleum-derived polymers added to improve its performance. The Illinois Department of Transportations bituminous (liquid asphalt) price index rose to $621 per ton on July 1 up 20% from June and 100% from January. Readers reported on Monday that prices had risen to $640 from around $290 last fall in Memphis and $675 from $425 recently in Atlanta. A reader forwarded a fax from an Illinois asphalt supplier on Saturday warning of additional increases this week. Newspapers in Boston Lexington Kentucky St. Louis and Denver reported that highway departments are cutting the number of paving jobs they award; the last two also reported some contractors may use concrete instead.