Construction input prices rose slightly by 0.3% in May on a monthly basis and are up 0.6% over the last 12 months, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data released today. Nonresidential input prices were also up 0.3% compared to the previous month and are 1.1% higher than they were a year ago.
Among the 11 subcategories, six saw prices fall last month, with the largest decreases in natural gas (-15.2%), unprocessed energy materials (-8.2%) and crude petroleum (-6.2%). Of the remaining five subcategories, only two experienced price increases greater than 1%: nonferrous wire and cable (+1.2%) and prepared asphalt, tar roofing and siding products (+1.1%), which also had the largest year-over-year price increase at 6.3%.
“Based on a variety of factors, materials prices should be escalating in the United States, yet nonresidential construction materials prices remain relatively stable,” said ABC Chief Economist Anirban Basu. “First, demand for materials remains high in the context of ongoing growth in nonresidential construction spending. This is especially true for a number of construction material intensive segments like highway and street. Indeed, prepared asphalt is the only category of construction materials that this report monitors that experienced a price increase exceeding 6% over the past year.
“Second, there is the issue of tariffs, including those that have impacted steel and aluminum prices in recent months,” said Basu. “Despite those surcharges on imported goods, no related categories are associated with significant inflationary pressure, though the price of fabricated steel products is up by a somewhat-above-average 2.8% over the past year. Third, there have been active attempts by certain groups of suppliers, including OPEC members, to truncate supply in an effort to raise prices. In large measure, those efforts have failed, with a host of commodity prices, including oil prices, declining recently.
“There are many factors that have helped to limit materials price increases, including a weakening global economy and the emergence of goods-producing nations like Vietnam and Indonesia,” said Basu. "A strong U.S. dollar has also helped to limit the commodity price increases encountered by America’s construction firms.
“For contractors, this comes as good news,” said Basu. “While U.S. construction firms will continue to wrestle with rising compensation costs, materials prices are likely to remain well behaved over the near term. There is little evidence that the global economy is reaccelerating. Moreover, the Trump administration recently removed tariffs on steel and aluminum with respect to Canada and Mexico. Finally, while public construction spending growth has been robust of late, there is some evidence that spending growth has become less intense in a number of private construction segments, which would have the effect of limiting demand for certain materials, all things being equal.”
Related Stories
Market Data | Dec 5, 2021
Nonresidential construction spending increases nearly 1% in October
Spending was up on a monthly basis in 13 of the 16 nonresidential subcategories.
Market Data | Nov 30, 2021
Two-thirds of metro areas add construction jobs from October 2020 to October 2021
The pandemic and supply chain woes may limit gains.
Market Data | Nov 22, 2021
Only 16 states and D.C. added construction jobs since the pandemic began
Texas, Wyoming have worst job losses since February 2020, while Utah, South Dakota add the most.
Market Data | Nov 10, 2021
Construction input prices see largest monthly increase since June
Construction input prices are 21.1% higher than in October 2020.
Market Data | Nov 9, 2021
Continued increases in construction materials prices starting to drive up price of construction projects
Supply chain and labor woes continue.
Market Data | Nov 5, 2021
Construction firms add 44,000 jobs in October
Gain occurs even as firms struggle with supply chain challenges.
Market Data | Nov 3, 2021
One-fifth of metro areas lost construction jobs between September 2020 and 2021
Beaumont-Port Arthur, Texas and Sacramento--Roseville--Arden-Arcade Calif. top lists of gainers.
Market Data | Nov 2, 2021
Construction spending slumps in September
A drop in residential work projects adds to ongoing downturn in private and public nonresidential.
Hotel Facilities | Oct 28, 2021
Marriott leads with the largest U.S. hotel construction pipeline at Q3 2021 close
In the third quarter alone, Marriott opened 60 new hotels/7,882 rooms accounting for 30% of all new hotel rooms that opened in the U.S.
Hotel Facilities | Oct 28, 2021
At the end of Q3 2021, Dallas tops the U.S. hotel construction pipeline
The top 25 U.S. markets account for 33% of all pipeline projects and 37% of all rooms in the U.S. hotel construction pipeline.