Contractors’ Bid Prices Finally Match Runup in Materials Prices
Contractors’ bid prices for constructing new nonresidential buildings finally caught up with soaring costs for the materials and service they buy in May, according to an analysis by the Associated General Contractors of America of government data released today. Association officials cautioned that contractors will have a hard time keeping pace with additional price spikes for many key construction materials.
“After enduring more than a year of runaway increases in the cost of items needed to build projects, contractors have finally raised their bid prices by an equivalent amount,” said Ken Simonson, the association’s chief economist. “But the runup in materials costs appears likely to continue to pressure contractors’ profit margins.”
The producer price index for inputs to new nonresidential construction—the prices charged by goods producers and service providers such as distributors and transportation firms—rose 1.9 percent from April to May and 18.9 percent since May 2021, following 12 consecutive months of 20-percent or greater increases.