Recent promises of tariffs and impending trade wars over metals, softwood lumber, and other imports have had many wondering about the effects on construction material pricing. Associated Builders and Contractors, Inc (ABC) recently analyzed data from the Bureau of Labor Statistics and it already shows a large increase in cost.
According to ABC’s research, construction materials have risen in cost 8.8% year-over-year and 2.2% from April to May 2018, which is the largest monthly increase since 2008. Nonresidential materials prices rose at a slightly larger percentage, 8.9% and 2.3% respectively.
It should have been obvious that introducing new tariffs would greatly increase materials costs in the short term. The major question is whether or not the U.S. can ramp up production of those materials, like steel, aluminum, and softwood lumber, quickly and cheaply enough to bring the prices back down.
Specifically, iron and steel products have increased 2.5% in 2018 versus 2017 and 2.5% from April to May. Softwood lumber also increased a significant amount, totaling a 6.4% increase month-to-month and 15.4% over the past year.
Plumbing fixtures and fittings have seen the smallest increases, totaling a 2.6% increase for the year and showing a 0.1% drop in costs month-to-month. Concrete products also showed a modest increase, at 0.3% for the month and 5.1% for the year.
ABC’s Chief Economist Anirban Basu is not viewing the news in a positive light. As he mentions in the ABC article, these increased costs could affect the construction industry in a variety of different ways, such as tightening margins and lowering the demand for construction projects.
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