Construction input prices increased 2.6% in February compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices rose 2.5% for the month.
Construction input prices are up 24.4% from a year ago, while nonresidential construction input prices are up 25.1%. Input prices for natural gas and unprocessed energy materials increased for the month, rising 65.1% and 32.3%, respectively. Crude petroleum prices increased 13.7% in February. All three energy subcategories are up significantly on a year-over-year basis.
“It will get worse before it gets better,” said ABC Chief Economist Anirban Basu. “Not only has Russia’s assault on democratic Ukraine created supply challenges in a number of categories, including oil and natural gas, but the reemergence of COVID-19 in parts of Asia and Europe is also poised to produce additional impacts. While many still expect commodity prices to decline later this year, the wait has been meaningfully extended by geopolitical conflicts and ongoing COVID-19 lockdowns.
![PPI Graph](/sites/default/files/inline-images/PPI_Graph_Feb_22.jpeg)
“For contractors, this has the potential to put even more downward pressure on margins,” said Basu. “It is likely that, as bid prices continue to soar, more project owners will choose to delay project starts. The current state of affairs also creates complications for public agencies considering when to start large-scale infrastructure projects. It is a challenging time to begin such projects, given the workforce shortages that remain and materials price inflation. Undoubtedly, some public administrators will decide to extend planning time, delaying project start dates.
“Remarkably, many projects to date have continued to move forward,” said Basu. “Construction backlog, as measured by ABC’s Construction Backlog Indicator, has remained stable for several months in the wake of rapidly rising materials prices. It remains to be seen whether this stability can prove resilient in the face of additional, severe supply challenges.”
Related Stories
Giants 400 | Aug 31, 2023
Top 35 Engineering Architecture Firms for 2023
Jacobs, AECOM, Alfa Tech, Burns & McDonnell, and Ramboll top the rankings of the nation's largest engineering architecture (EA) firms for nonresidential buildings and multifamily buildings work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Aug 22, 2023
Top 115 Architecture Engineering Firms for 2023
Stantec, HDR, Page, HOK, and Arcadis North America top the rankings of the nation's largest architecture engineering (AE) firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Giants 400 | Aug 22, 2023
2023 Giants 400 Report: Ranking the nation's largest architecture, engineering, and construction firms
A record 552 AEC firms submitted data for BD+C's 2023 Giants 400 Report. The final report includes 137 rankings across 25 building sectors and specialty categories.
Giants 400 | Aug 22, 2023
Top 175 Architecture Firms for 2023
Gensler, HKS, Perkins&Will, Corgan, and Perkins Eastman top the rankings of the nation's largest architecture firms for nonresidential building and multifamily housing work, as reported in Building Design+Construction's 2023 Giants 400 Report.
Apartments | Aug 22, 2023
Key takeaways from RCLCO's 2023 apartment renter preferences study
Gregg Logan, Managing Director of real estate consulting firm RCLCO, reveals the highlights of RCLCO's new research study, “2023 Rental Consumer Preferences Report.” Logan speaks with BD+C's Robert Cassidy.
Apartments | Aug 14, 2023
Yardi Matrix updates near-term multifamily supply forecast
The multifamily housing supply could increase by up to nearly 7% by the end of 2023, states the latest Multifamily Supply Forecast from Yardi Matrix.
Sports and Recreational Facilities | Jul 26, 2023
10 ways public aquatic centers and recreation centers benefit community health
A new report from HMC Architects explores the critical role aquatic centers and recreation centers play in society and how they can make a lasting, positive impact on the people they serve.
Market Data | Jul 24, 2023
Leading economists call for 2% increase in building construction spending in 2024
Following a 19.7% surge in spending for commercial, institutional, and industrial buildings in 2023, leading construction industry economists expect spending growth to come back to earth in 2024, according to the July 2023 AIA Consensus Construction Forecast Panel.
Codes and Standards | Jul 17, 2023
Outdated federal rainfall analysis impacting infrastructure projects, flood insurance
Severe rainstorms, sometimes described as “atmospheric rivers” or “torrential thunderstorms,” are making the concept of a “1-in-100-year flood event” obsolete, according to a report from First Street Foundation, an organization focused on weather risk research.
Multifamily Housing | Jul 13, 2023
Walkable neighborhoods encourage stronger sense of community
Adults who live in walkable neighborhoods are more likely to interact with their neighbors and have a stronger sense of community than people who live in car-dependent communities, according to a report by the Herbert Wertheim School of Public Health and Human Longevity Science at University of California San Diego.