Construction input prices dipped 0.1% in September compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices also fell 0.1% for the month.
Construction input prices are up 16.3% from a year ago, while nonresidential construction input prices are 15.9% higher. Input prices were down in six of 11 subcategories on a monthly basis. Steel mill prices fell 6.7% and iron and steel prices dropped 5.4%. Natural gas prices rose 3.1%, while crude petroleum prices were down 3.4% in September. Overall producer prices expanded 0.4% in September, a larger increase than the consensus estimate of 0.2%.
“Investors and other stakeholders are eagerly awaiting any indications of meaningful declines in inflationary pressures,” said ABC Chief Economist Anirban Basu. “Elevated inflation and interest rate increases have not only undone momentum in America’s homebuilding industry but also threaten the entire global economy. There are already indications of growing financial stress, including at banking giant Credit Suisse. This is bad news for the heavily financed real estate and construction segments.
“While many American nonresidential contractors remain upbeat, according to ABC’s Construction Confidence Index, there are significant threats looming over the industry,” said Basu. “Next year stands to be a weak one for the U.S. economy as it continues to absorb the impacts of rapidly rising borrowing costs.
“Today’s PPI release strongly suggests that there is no impending end to the Federal Reserve’s rate-tightening, which means that negative factors threatening the broader economy and nonresidential construction are only getting stronger,” said Basu. “While nonresidential input prices fell slightly, inflation came in hotter than anticipated in the overall report. For contractors, the upshot is that they should be actively preparing their respective balance sheets for a downturn, even as many firms presently operate at capacity.”
![PPI Table September](/sites/default/files/inline-images/PPI_Table_Sep_22.jpeg)
![PPI Graph September](/sites/default/files/inline-images/PPI_Graph_Sep_22.jpeg)
Related Stories
Market Data | Jun 2, 2016
ABC: Nonresidential construction spending down in April
Lower building material prices, a sluggish U.S. economy, and hesitation among private developers all factor into the 2.1% drop.
Market Data | May 20, 2016
Report: Urban area population growth slows
Older Millennials are looking to buy homes and move away to more affordable suburbs and exurbs.
Market Data | May 17, 2016
Modest growth for AIA’s Architecture Billings Index in April
The American Institute of Architects reported the April ABI score was 50.6, down from the mark of 51.9 in the previous month. This score still reflects an increase in design services.
Market Data | Apr 29, 2016
ABC: Quarterly GDP growth slowest in two years
Bureau of Economic Analysis data indicates that the U.S. output is barely growing and that nonresidential investment is down.
Market Data | Apr 20, 2016
AIA: Architecture Billings Index ends first quarter on upswing
The multi-family residential sector fared the best. The Midwest was the only U.S. region that didn't see an increase in billings.
Building Technology | Apr 11, 2016
A nascent commercial wireless sensor market is poised to ascend in the next decade
Europe and Asia will propel that growth, according to a new report from Navigant.
Industry Research | Apr 7, 2016
CBRE provides latest insight into healthcare real estate investors’ strategies
Survey respondents are targeting smaller acquisitions, at a time when market cap rates are narrowing for different product types.
Market Data | Apr 4, 2016
ABC: Nonresidential spending slip in February no cause for alarm
Spending in the nonresidential sector totaled $690.3 billion on a seasonally adjusted, annualized basis in February. The figure is a step back but still significantly higher than one year ago.
Market Data | Mar 30, 2016
10 trends for commercial real estate: JLL report
The report looks at global threats and opportunities, and how CRE firms are managing their expectations for growth.
Market Data | Mar 23, 2016
AIA: Modest expansion for Architecture Billings Index
Business conditions softening most in Midwest in recent months.