A cost squeeze for contractors intensified in October as the producer price index (PPI) for inputs to new nonresidential construction increased for the sixth consecutive month (up 0.5% from September), while the PPI for new nonresidential building construction—a measure of the price that contractors say they would charge to build a fixed set of buildings—was unchanged from September, the Bureau of Labor Statistics (BLS) reported, and Associated General Contractors of America (AGC) analyzed.
The “bid price” PPI has dipped 0.1% since April, while the new-construction input price index has increased 6.3%. The input price index for new residential construction rose even more since April: 10.6%, driven in part by a 46% jump in the PPI for lumber and plywood over six months and 45% over 12 months (although that index declined 3.4% from September to October). Over 12 months, the PPIs for inputs to new residential construction climbed 8.2%; inputs to new nonresidential residential construction, 2.2%; and “bid prices”, 1.3%. Items in addition to lumber and plywood that are important to construction with large 1- or 12-month changes include: copper and brass mill shapes, down 0.6% for the month but up 11% year-over-year (y/y); paving mixtures and blocks, -0.4% and -5.1%, respectively; aluminum mill shapes, -3.7% and -6.5%; steel mill products, 1.4% and -8%; and diesel fuel, 0.6% and -15%.
There were 229,000 job openings in construction, not seasonally adjusted, at the end of September, down 31% from the 333,000 openings in September 2019, BLS reported in its latest Job Openings and Labor Turnover Survey (JOLTS) release. September was the seventh consecutive month in which openings declined y/y, in most cases by more than 20%. Hires in September totaled 369,000, down 16% y/y. Layoffs and discharges plunged 55% y/y to 101,000, the smallest monthly total in the 20-year history of the series. Quits shrank by 16% y/y to 169,000.
