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U.S. Construction input prices marginally
increased in September,
Construction input prices remain marginally higher than one year ago, according to an analysis of U.S. Bureau of Labor Statics Producer Price Index data conducted by the Associated Builders and Contractors (ABC). Overall construction input prices are 0.3% higher than a year ago, while nonresidential construction prices are 0.6% higher.
According to the ABC analysis, overall input prices have increased 0.2% over the past month, driven by a 10.1% increase in the price of crude petroleum, a 7.5% increase in unprocessed energy materials, and a 0.1% increase in natural gas prices. Among the inputs that decreased in value over the past month were steel mill products (down 3.7%), softwood lumber (down 1.7%), and iron and steel (down 2.4%).
Meanwhile, the inputs that have driven the 0.3% overall increase over the past year are brick and structural clay tile (up 6.4%), concrete products (up 9.1%), and construction machinery and equipment (up 6.1%). Price reductions that have helped counter such increases are softwood lumber (down 15.2%), natural gas (down 74.1%), and steel mill products (down 12.1%).
¡°Today¡¯s PPI report indicates that while inflationary pressures persist economywide, materials price increases are no longer at the heart of this bout of excess inflation,¡± said ABC Chief Economist Anirban Basu about the figures. ¡°When inflation began to emerge in 2021, supply chains ill-prepared to handle surging demand for goods and services during the early stages of post-pandemic recovery were among the primary culprits. Today, inflation is driven less by supply chain issues and more by structural labor market dynamics and geopolitics.¡±
¡°Many contractors continue to indicate that their primary challenge is securing sufficient levels of workers,¡± Basu continued. ¡°That will not change anytime soon and could only be countered by a sharp downturn in construction activity. At this time, that sharp downturn is not anticipated,¡± said Basu. ¡°Rather, contractors continue to report healthy backlog, plentiful bidding opportunities and expectations for sales, employment and profit margin growth during the months ahead, according to ABC¡¯s Construction Confidence Index.¡±
While overall construction input prices have remained relatively stable over the past 12 months, such figures remain significantly above pre-pandemic levels. Since February 2020, the price of all commodities in the ABC¡¯s analysis has risen dramatically, leading to the overall input construction price being 41% higher today than in February 2020.
The ABC¡¯s latest analysis comes one week after September¡¯s Dodge Momentum Index rose 3%. In late September, meanwhile, we reported on how the looming federal government shutdown could impact infrastructure projects, as well as a prediction by ABC¡¯s Basu that there was no sign of a construction recession in the near term.