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Facing weak demand for construction, contractors held down bid prices in November despite huge jumps in diesel fuel and copper prices, the Associated General Contractors of America (AGC) reported on Dec. 16.
Prices for construction materials climbed 0.5% in November and 4.8% over the past 12 months, AGC said, while price indexes for finished buildings remained flat.
The price jumps could be “the last straw for some hard-pressed contractors,” said Ken Simonson, the association’s chief economist.
Simonson noted that prices shot up 5.6% in November and 16% over the last 12 months for copper and brass mill shapes, 4.8% and 18% respectively for diesel fuel and 3.5% and 14% for aluminum mill shapes.
“Since these data were collected in mid-November, prices have risen further for all of these materials, and steel makers have also announced hefty increases,” he said.
“Contractors have been unable to recoup these costs in what they charge,” Simonson added. “Indexes for new office, school, warehouse and industrial buildings were virtually unchanged both for the month and over 12 months. Prices charged by concrete, roofing, electrical and plumbing contractors showed very small movements in either direction.”
Contractors are likely to be squeezed by rising material prices and flat prices for complete projects for the foreseeable future, Simonson predicted. He forecasted that contractors would experience periods of simultaneous price spikes in multiple materials in 2011 as the U.S. and foreign economies pick up speed.
“Unfortunately, demand for construction will be erratic for months to come, worsening the price pinch that has already devastated too many firms and their workers,” he said.
On the employment front — which has been decimated for the nation’s construction workers — AGC reported more encouraging news, with construction employment in November expanding in 20 states and 13 states and the District of Columbia showing year-over-year job gains for that month.
Unemployment in construction was running at 18.8% in November, almost double the national unemployment rate.
He also noted that the gains in construction employment have been “as spotty as they are tenuous.”
California had the largest monthly increase in construction employment — adding 7,800 jobs — but also the largest 12-month drop — 36,900 jobs, or 6.4%.
New Jersey and New York had the next-highest number of construction job gains in November, with 4,500. New Jersey also led the nation in monthly percentage gains (3.7%), followed by Vermont (3.4%, 400 jobs) and Maine (2.5%, 600 jobs).