AGC: Construction Costs Outpacing Contractor Charges

Construction costs have squeezed contractor profits as prices for construction material and services have climbed steeply during the past year. The producer price index for the construction industry was relatively steady in July, but jumped 8.1 percent from July 2017, said the Associated General Contractors of America in an analysis of new Labor Department data. As pre-tariff inventories diminish, contractors are likely to see additional cost pressure, said AGC.

“Although price changes for construction materials in July were mixed, contractors are likely to be hit with additional cost increases as new tariffs take hold and stocks of items purchased before the tariffs are used up,” said AGC Chief Economist Ken Simonson. “Despite the pause in cost increases in July, prices for goods and services used in construction rose over the past year at more than double the rate that contractors have raised their bid prices to put up new buildings.”