Overall construction input prices rose 0.7% in February, slightly lower than the rate set in January, according to an Associated Builders and Contractors (ABC) analysis of Bureau of Labor Statistics data. Compared to February 2017, prices are up 5.2%. Nonresidential construction materials prices are also up 0.4% on a monthly basis and 4.9% compared to the same time last year.
Prices for all 11 subcategories increased year over year, and only three saw monthly declines. Crude petroleum saw the largest drop in price, falling 7.3% for the month, though it is up 16.6% on a year-over-year basis. Prices were also down for prepared asphalt, tar roofing and siding products (-4.9%) and nonferrous wire and cable (-2.6%). The largest monthly increase was in natural gas, which rose 23.5% in February. The rise in natural gas and drop in crude petroleum is a reversal of what was seen in January’s data.
“For the last several months, construction firms have become increasingly concerned about rising construction materials prices,” said ABC Chief Economist Anirban Basu. “Today’s data show those concerns are warranted. A confluence of factors will likely continue to push materials prices higher in the months to come. These factors include global monetary policy, which continues to help accelerate growth in much of the world, a strong U.S. construction market and a policymaking environment that has impacted the price of softwood lumber, steel and aluminum.
“Recently enacted tariffs are making headlines, but steel prices were already rising rapidly,” said Basu. “Based on today’s report, iron and steel prices rose 7.1% from February 2017 to February 2018. The price of steel mill products was up 4.8%, while the price of softwood lumber was up 15.6%.
“On top of materials price increases are, of course, expanding human capital shortfalls and rising compensation costs,” said Basu. “These factors have likely moderated near-term confidence among construction firms regarding profit margin growth in the midst of a healthy economy.”
Related Stories
Industry Research | Aug 11, 2017
NCARB releases latest data on architectural education, licensure, and diversity
On average, becoming an architect takes 12.5 years—from the time a student enrolls in school to the moment they receive a license.
Market Data | Aug 4, 2017
U.S. grand total construction starts growth projection revised slightly downward
ConstructConnect’s quarterly report shows courthouses and sports stadiums to end 2017 with a flourish.
Market Data | Aug 2, 2017
Nonresidential Construction Spending falls in June, driven by public sector
June’s weak construction spending report can be largely attributed to the public sector.
Market Data | Jul 31, 2017
U.S. economic growth accelerates in second quarter; Nonresidential fixed investment maintains momentum
Nonresidential fixed investment, a category of GDP embodying nonresidential construction activity, expanded at a 5.2% seasonally adjusted annual rate.
Multifamily Housing | Jul 27, 2017
Apartment market index: Business conditions soften, but still solid
Despite some softness at the high end of the apartment market, demand for apartments will continue to be substantial for years to come, according to the National Multifamily Housing Council.
Market Data | Jul 25, 2017
What's your employer value proposition?
Hiring and retaining talent is one of the top challenges faced by most professional services firms.
Market Data | Jul 25, 2017
Moderating economic growth triggers construction forecast downgrade for 2017 and 2018
Prospects for the construction industry have weakened with developments over the first half of the year.
Industry Research | Jul 6, 2017
The four types of strategic real estate amenities
From swimming pools to pirate ships, amenities (even crazy ones) aren’t just perks, but assets to enhance performance.
Market Data | Jun 29, 2017
Silicon Valley, Long Island among the priciest places for office fitouts
Coming out on top as the most expensive market to build out an office is Silicon Valley, Calif., with an out-of-pocket cost of $199.22.
Market Data | Jun 26, 2017
Construction disputes were slightly less contentious last year
But poorly written and administered contracts are still problems, says latest Arcadis report.