According to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data released today, construction input prices rose 0.9% monthly in February and 1.8% in the past 12 months. Inputs to nonresidential construction were up 1% on a monthly basis and 2.7% on a yearly basis. This is the first time that input prices have risen on a monthly basis since October 2018, when prices increased by 0.5%.
Of the 11 construction subcategories, seven experienced price declines for the month, with the largest decreases in natural gas (-25.8%) and unprocessed energy materials (-10.7%). The largest monthly increases in prices were seen in softwood lumber (+4.8%) and crude petroleum (+2.6%).
“While the monthly increase in materials prices was quite substantial, it makes more sense to focus on the year-over-year statistics,” said ABC Chief Economist Anirban Basu. Several factors were at work when materials prices were expanding very rapidly, including a synchronized global expansion and the initial effects of tariffs on items such as steel, aluminum and softwood lumber. At the time, year-over-year increases in materials prices were routinely in the double digits in percentage terms.
“Today, the annualized increase in materials prices is less than 2%, despite the data characterizing February,” said Basu. Some of this is explained by the dip in oil prices during the past year, which is due in part to a softening global economy and a significant increase in U.S. oil production. However, other key construction materials prices also have declined during the last 12 months, including natural gas, nonferrous wire and cable and softwood lumber.
“With the global economy continuing to weaken, it is unlikely that materials prices will surge in the near term, despite a still very active U.S. nonresidential construction sector,” said Basu. “It is quite conceivable that much of the monthly increase in materials prices registered in February was associated with unusually severe winter weather in much of the nation. Difficulties involving transportation, for instance, have a tendency to push purchase prices higher. The implication is that the monthly increase registered in February will probably not be repeated in March and April.”
Related Stories
Market Data | Mar 22, 2018
Architecture billings continue to hold positive in 2018
Billings particularly strong at firms in the West and Midwest regions.
Market Data | Mar 21, 2018
Construction employment increases in 248 metro areas as new metal tariffs threaten future sector job gains
Riverside-San Bernardino-Ontario, Calif., and Merced, Calif., experience largest year-over-year gains; Baton Rouge, La., and Auburn-Opelika, Ala., have biggest annual declines in construction employment.
Market Data | Mar 19, 2018
ABC's Construction Backlog Indicator hits a new high: 2018 poised to be a very strong year for construction spending
CBI is up by 1.36 months, or 16.3%, on a year-over-year basis.
Market Data | Mar 15, 2018
ABC: Construction materials prices continue to expand briskly in February
Compared to February 2017, prices are up 5.2%.
Market Data | Mar 14, 2018
AGC: Tariff increases threaten to make many project unaffordable
Construction costs escalated in February, driven by price increases for a wide range of building materials, including steel and aluminum.
Market Data | Mar 12, 2018
Construction employers add 61,000 jobs in February and 254,000 over the year
Hourly earnings rise 3.3% as sector strives to draw in new workers.
Steel Buildings | Mar 9, 2018
New steel and aluminum tariffs will hurt construction firms by raising materials costs; potential trade war will dampen demand, says AGC of America
Independent studies suggest the construction industry could lose nearly 30,000 jobs as a result of administration's new tariffs as many firms will be forced to absorb increased costs.
Market Data | Mar 8, 2018
Prioritizing your marketing initiatives
It’s time to take a comprehensive look at your plans and figure out the best way to get from Point A to Point B.
Market Data | Mar 6, 2018
Persistent workforce shortages challenge commercial construction industry as U.S. building demands continue to grow
To increase jobsite efficiency and improve labor productivity, increasingly more builders are turning to alternative construction solutions.
Market Data | Mar 2, 2018
Nonresidential construction spending dips slightly in January
Private nonresidential construction fell 1.5% for the month, while public sector nonresidential spending increased 1.9%.