The amount contractors pay for a range of key construction materials
dropped 0.6 percent in October, but climbed 6.9 percent from the year-earlier
level, according to an analysis from the Associated General Contractors of America.
Meanwhile, the price contractors charge for new nonresidential building
construction edged up only 3.3 to 4.3 percent over 12 months, depending on
building type.
“While the gap is beginning to narrow just a
bit, prices for most construction materials have risen far more during the past
year than the amount contractors can charge for completing construction
projects,” said Ken Simonson, the association’s chief economist. “Coupled with
weak growth in demand for construction, the price gap is likely contributing to
the stagnant employment levels the industry has been experiencing all year.”
Simonson
noted that prices for a number of key construction materials declined during
the past month. For example, prices for diesel fuel dropped 2.2 percent in
October, but are up 27.3 percent since October 2010.
“Costs
for essential construction materials are likely to remain volatile, causing
financial difficulties for some contractors, who must guarantee prices to
owners months before purchasing materials,” said Simonson.
