ARLINGTON, VA — Construction contractors continue to be squeezed by rising prices for key construction materials and flat prices for what they can charge for finished projects, according to an analysis of October Producer Price Index figures released by the Associated General Contractors of America. Prices for materials used in construction jumped by 0.6 percent in October and 4.8 percent over the past 12 months, while the price index for finished buildings remained flat.
“As if declining demand and dramatic layoffs weren’t enough, the construction industry also has to pay more for key materials while charging the same for finished projects,” said Ken Simonson, the association’s chief economist. “This squeeze is likely to force firms to shut their doors, compounding the already staggering 17.3 percent unemployment rate for the sector.”
Contractors are likely to continue to be squeezed by rising materials prices and flat prices for completed projects for the remainder of the year, Simonson predicted. He added that contractors will be vulnerable to sudden price spikes in multiple materials in 2011 as the U.S. and foreign economies gradually recover.
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