Prices for key construction materials nationwide escalated while prices construction firms charge for completed projects have stayed flat, according to a report from the Associated General Contractors of America (AGC).
"Construction spending has sunk to 1999 levels, forcing contractors to keep bid prices down to win projects, despite huge price increases for key inputs," said Ken Simonson, the association’s chief economist. "That steadily widening gulf threatens to put construction firms out of business and their employees out of work."
Prices for materials used in construction increased 6.9 percent in March compared to the same time last year. Compared to the previous month, the increase was 2 percent, according to the report.
Construction materials costs rose faster than the producer price index for finished goods, which climbed 5.8 percent in March from the same time last year.
"Shrinking demand for both public and privately financed construction is driving up the number of contractors bidding on projects and forcing contractors to hold the line on bid prices for all types of projects," Simonson said.
