AGC: Construction labor, materials costs up in April

While wage and material costs are up for April, an index that measures contractors’ bids indicated bid prices declined 0.3 percent, according to an analysis of government data released last week by the Arlington, Virginia-based Associated General Contractors of America (AGC).

Association officials say the new data indicates contractors are getting squeezed by rising materials prices at a time when what they charge to build projects is declining.

“Prices remain volatile for many key construction materials, making it difficult for contractors to bid projects that may take years to complete,” AGC Chief Economist Ken Simonson says. “Even some materials that have dropped in price recently have still posted year-over-year increases exceeding 10 percent.”

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Construction firms added 15,000 jobs in April, including 14,200 in residential construction and 800 in nonresidential areas.

Meanwhile, spending on residential construction dipped by 0.2 percent in April, the 10th straight month of declines in residential spending, Simonson says.

For months, one of construction firms’ major concerns has been finding enough qualified employees to meet demand, and that trend continued in April, AGC CEO Stephen E. Sandherr says.

“Contractors can’t find, reach, hire and train workers fast enough to keep pace with demand,” he says. “The pool of qualified, available labor is the smallest the industry has ever seen for the month of April.”

The mean average wage for all construction workers is $46,350, according to the federal Bureau of Labor Statistics (BLS).

The unemployment rate among jobseekers with construction experience declined from 4.6 percent in April 2022 to 4.1 percent, the lowest April rate in the 23-year history of the data. A separate government report released during the first week of May reported that job openings in construction at the end of March totaled 355,000, just shy of the all-time high in March of 359,000.

Average hourly earnings for production and nonsupervisory employees in construction—covering most onsite craft workers as well as many office workers—jumped by 6.7 percent year-over-year to $33.94 per hour. Construction firms in April provided a wage “premium” of nearly 19 percent compared with the average hourly earnings for all private-sector production employees, says the AGC.

The Producer Price Index (PPI) also was up for the month of April by 0.5 percent, the AGC says, but that’s still down 1.1 percent year over year.  The divergent changes were driven by the PPI for energy inputs to construction, which climbed 1.9 percent for the month but tumbled 16.3 percent compared to April 2022, when prices soared following Russia’s invasion of Ukraine.