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Calling a spike in construction materials costs “unprecedented,” the Association of General Contractors of America is warning of challenges facing construction firms and likely slowdowns in construction projects.
The most recent Producer Price Index report issued by the federal government showed a 3.5 percent increase in all construction-related goods from February to March and a 12.9 percent increase between March 2020 and March 2021.
Both increases are the biggest jumps in the index’s 35-year history, AGCA sai.
“Today’s producer price index report documents just some of challenges contractors are experiencing with fast-rising materials costs, lengthening or uncertain delivery times and rationing of key inputs,” the association’s chief economist, Ken Simonson said in a statement. “These problems threaten to drive up the cost and completion time for many vital projects and potentially set back the recovery in construction employment.”
Contractors are receiving notices “daily” about longer lead times on items, he added.
Some of the problem comes down to pandemic-related labor shortages in the supply chain, AGC said. With the economy revving up but COVID-19 continuing to send workers home sick or limiting the number of people who can work in the same space at once, Factory output can’t keep up with demand. The association also blamed the Biden administration’s decision not to remove Trump administration tariffs on construction materials imported from abroad, including China, part of a series of trade wars begun by President Donald Trump.
