Steel Scrap Up 93% Since Last Year

Prices for iron and steel components were up a whopping 93% in May, and higher steel and metal prices were one of the driving forces in pushing overall highway and street construction materials 15% higher compared to the same month in 2007.

That’s the key finding in a recent American Road & Transportation Builders Association report.

During the same time period, inflation, as measured by the Consumer Price Index, was 4.2%. Overall, ARTBA has tracked a 48% increase in combined material costs from 2003 through the end of 2007.

The ARTBA “Highway Construction Producer Prices” report outlines year-over-year increases in the following categories:

• Iron and steel scrap: 93.3%
• Asphalt paving and block manufacturing: 8.4%
• Sand, gravel and crushed stone: 6.7%
• Ready-mix concrete: 2.4%
• Concrete block and brick: 2%
• Cement: .8%

Alison Premo Black, ARTBA vice president of policy, says the trend of material costs outpacing inflation has sharply increased the cost of doing business in the transportation-construction industry. In addition, she noted global competition for limited resources dramatically impacts the cost of some materials—particularly iron and steel—used in U.S. projects.

“About 12% of the steel used in the United States is acquired from a volatile worldwide market,” she says. “When demand increases in growing nations like China and India, costs rise for U.S. contractors who must compete in the global marketplace to secure steel inputs.”

AGC to Congress: Invest in Flood Control

The Associated General Contractors of America has called on Congress to provide an appropriation of at least $6.8 billion for the Corps of Engineers Civil Works program in 2009.

The Bush Administration’s proposal of $4.4 billion for the U.S. Army Corps of Engineers Civil Works program is “short sighted,” the AGC contends. It demonstrates a failure to invest in the nation’s water resources infrastructure by proposing an $800 million cut over what was enacted by Congress for 2008.

“Unfortunately, tragedies like the Midwest floods highlight the deficiencies in America’s critical infrastructure,” says AGC chief executive officer Stephen Sandherr. “AGC has been trying to get Congress and the Administration to focus on the massive documented needs for levees, locks and dams.”

U.of I. Flash Index Breaks 12-month Decline

The University of Illinois Flash Index stopped a 12-month slide by holding steady in June.

The index level of 102.3 reached in May remains at its lowest point since September 2004, considerably lower than the level of 106.8 posted in June 2007. However, the index remains above 100, which is the dividing line between growth and decline.

“It is unlikely that the U.S. economy is currently in a recession,” says economist J. Fred Giertz, who produces the Flash Index. “The economy grew during the first quarter of 2008 at a slow 1% rate. Most observers believe the just-ended second quarter will be much the same. This is clearly a major slow-down, but not a recession.

All three components of the index—individual income tax, corporate tax and sales tax receipts—were up modestly in real terms from the same month last year.

Illinois is growing somewhat more rapidly that the national economy, Giertz says. The state has avoided some of the housing market and subprime lending problems that have plagued states like Florida, California and Arizona, and the fallback in the automobile industry that has hurt Michigan and Ohio.