New Price and Supply Chain Challenges Emerge

Ken Simonson
February 16, 2024|


Bid prices and input prices for construction showed mixed monthly and year-over-year patterns in January, according to data the Bureau of Labor Statistics posted Feb. 16. The producer price index for new nonresidential building construction – a measure of prices that contractors say they would bid to erect a fixed set of buildings – rose 0.3 percent, not seasonally adjusted, for the month but declined 1.1 percent year over year, the first year-over-year decrease since 2010. The PPI for material and service inputs to new nonresidential construction rose 0.6 percent for the month, the largest one-month increase since August. But the index rose only 1 percent year over year, down from 1.8 percent between December 2022 and December 2023. As it does each January, BLS adjusted the relative importance weights for inputs.

There are increasing examples of higher materials prices and supply chain issues. The average retail price of on-highway diesel fuel jumped 21 cents per gallon from Feb. 5 to Feb. 12, according to the Energy Information Administration. Martin Marietta Materials, the largest producer of construction aggregates, stated in its quarterly investor call Feb. 14 that it expects aggregates prices to increase 10 percent to12 percent in 2024, with possible additional increases mid-year. Insulation supplier Rockwool notified customers on Feb. 2 that due to high demand, it is implementing a “pause” on confirmed orders as of March 1 and “open orders scheduled for shipment in March and April will be put on hold.” Readers are invited to report other supply-chain issues and price announcements to me at

“A once-booming U.S. warehousing market is coping with signs of contraction as businesses consolidate warehouses and in some cases upgrade existing sites rather than add facilities,” the Wall Street Journal reported Feb. 14.

And from real estate services firm Savills:

“The shift comes as retailers have turned the corner on a big drawdown of inventories and are aligning their supply chains for more normal, pre-pandemic stocking and consumer spending patterns….The amount of U.S. warehouse space listed for sublease reached a record high of more than 156 million square feet in the fourth quarter of 2023, more than three times the amount available in the fourth quarter of 2021.”

Spending on warehouse construction fell 8 percent from July to December, according to Census Bureau data posted on Feb. 1.

For more details, download the AGC of America’s Data Digest here.

Ken Simonson is chief economist of the Associated General Contractors of America.



About the Author: Ken Simonson

Ken Simonson
Ken Simonson is Chief Economist for the Associated General Contractors of America.

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