AGC shows material interest in inflation

The Arlington, Virginia-based Associated General Contractors of America (AGC) says April producer price index data demonstrates how a “wide variety of materials with double-digit price increases” could threaten to undermine economic recovery in the United States.

According to AGC, the cost of goods and services used in construction accelerated further in April as more items logged double-digit increases over the past year.

The index for steel mill products climbed 67 percent, while the index for copper and brass mill shapes rose 49 percent and the index for aluminum mill shapes increased 20.5 percent. Other items with especially steep price increases over the past year, says AGC, lumber and plywood costs rising by 85.7 percent from April 2020 to last month. The index for plastic construction products rose 14.2 percent, with a 12.1 percent rise for gypsum products.

“Today’s producer price index report—bad though it is—actually understates the severity of the problems contractors are experiencing,” says Ken Simonson, the association’s chief economist. “Many items have posted even steeper price increases since the data for this report were collected in mid-April, while lead times for producing goods and delivery times to distributors and worksites have grown ever longer and less certain.”

The AGC says some of the supply chain problems have resulted from the pandemic or one-time events like the freeze in Texas in February that damaged plants producing inputs for construction plastics. But they say federal policies, particularly tariffs and quotas on key building materials like lumber, steel, and aluminum have exacerbated the price spikes, supply shortages, and delivery delays. They have urged the administration of Joe Biden “to end those import obstacles and explore ways to help uncork supply-chain bottlenecks.”

States Stephen E. Sandherr, CEO of the AGC, “The Biden administration must address these unprecedented lumber and steel costs and broader supply-chain woes or risk undermining the economic recovery. Without tariff relief and other measures, vital construction projects will fall behind schedule or be canceled.”