AGC says material costs will stay high."Get used to higher materials cost inflation," Ken Simonson, chief economist The Chief Economist is a single position job class having primary responsibility for the development, coordination, and production of economic and financial analysis. It is distinguished from the other economist positions by the broader scope of responsibility encompassing the for The Associated General Contractors Associated General Contractors of America is the nation's oldest and largest trade association representing the construction industry. It was formed in 1918 following a request by President Woodrow Wilson. of America (AGC AGC Automatic Gain Control AGC Automotive Glass Cartridge (fuse) AGC Associated General Contractors AGC Associated General Contractors of America AGC Atypical Glandular Cells AGC Attorney-General's Chambers ), warned recently. Simonson commented after the Bureau of Labor Statistics Bureau of Labor Statistics (BLS) A research agency of the U.S. Department of Labor; it compiles statistics on hours of work, average hourly earnings, employment and unemployment, consumer prices and many other variables. issued its report on the producer price index (PPI (1) (Pixels Per Inch) The measurement of the resolution of a monitor or scanner. For example, a monitor that is 16 inches wide and displays 1600 pixels across its width would have a resolution of 100 ppi (1600 divided by 16). ) for May. "Overall, producer prices are remaining well behaved, with only a 0.2% increase in May and a 1.5% increase in the last year, outside of food and energy," Simonson noted. "But the PPI for construction materials and components jumped 1.2% last month and 7.8% over 12 months. By project type, the 12-month increases range from 8% for new single-unit residential construction to 16% for highway construction. "Many materials are contributing to the increase," Simonson commented. "In the last 12 months, there have been increases of 87% for copper and brass mill shapes, 48% for asphalt, 40% for diesel fuel, 26% for gypsum gypsum (jĭp`səm), mineral composed of calcium sulfate (calcium, sulfur, and oxygen) with two molecules of water, CaSO4·2H2O. It is the most common sulfate mineral, occurring in many places in a variety of forms. products, 18% for plastic construction products and 15% for cement. "I expect a few of these increases to level off as the housing market cools, but most are tied to strong U.S. and world demand for materials and freight transportation," Simonson said. "Thus, I think construction materials costs will keep outstripping the overall inflation rate. "Public agencies, private owners, and contractors need to face this new reality," Simonson concluded. "Budgets must allow for more inflation, for purchasing materials earlier, and for sharing the risk and reward from price volatility." |
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