Construction Costs Continue to Rise

The aggregate price of inputs to construction industries increased 6.5 percent over the past 12 months, according to the April 15 Bureau of Labor Statistics March 2008 producer price index data.
The rise was more rapid than the previous 12-month period ending March 2007, when construction input prices went up 3.9 percent.
Construction inputs include materials such as cement, lumber, steel and diesel fuel.
Construction inflation remains less pronounced than during the 2004-2005 period, when overall 12-month construction price increases routinely approached 10 percent.
In terms of one-month percent change, the overall price of construction inputs rose 2.1 percent in March, which represents the largest one month increase this decade. The overall PPI rose 1.1 percent in March and 6.9 percent over the past 12 months.
According to a statement issued by the Associated Builders and Contractors, the news of a rapidly rising PPI is not good for the construction industry.
“Previous producer price increases were sharper than those recorded in March, but also took place during a time of economic expansion,” the statement read.
“With the economy now likely in recession and credit markets still in turmoil, customers will be particularly sensitive to price, which will make it difficult for ABC members and others to pass along materials price increases to their clients.”

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