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 | Nov 23, 2020
Construction employment is down in three-fourths of states since February
This news comes even after 36 states added construction jobs in October.
Market Data | Nov 18, 2020
Architecture billings remained stalled in October
The pace of decline during October remained at about the same level as in September.
Market Data | Nov 17, 2020
Architects face data, culture gaps in fighting climate change
New study outlines how building product manufacturers can best support architects in climate action.
Market Data | Nov 10, 2020
Construction association ready to work with president-elect Biden to prepare significant new infrastructure and recovery measures
Incoming president and congress should focus on enacting measures to rebuild infrastructure and revive the economy.
Market Data | Nov 9, 2020
Construction sector adds 84,000 workers in October
A growing number of project cancellations risks undermining future industry job gains.
Market Data | Nov 4, 2020
Drop in nonresidential construction offsets most residential spending gains as growing number of contractors report cancelled projects
Association officials warn that demand for nonresidential construction will slide further without new federal relief measures.
Market Data | Nov 2, 2020
Nonresidential construction spending declines further in September
Among the sixteen nonresidential subcategories, thirteen were down on a monthly basis.
Market Data | Nov 2, 2020
A white paper assesses seniors’ access to livable communities
The Joint Center for Housing Studies and AARP’s Public Policy Institute connect livability with income, race, and housing costs.
Market Data | Nov 2, 2020
More contractors report canceled projects than starts, survey finds
Construction employment declined in most metros in latest 12 months.
Multifamily Housing | Oct 30, 2020
The Weekly show: Multifamily security tips, the state of construction industry research, and AGC's market update
BD+C editors speak with experts from AGC, Charles Pankow Foundation, and Silva Consultants on the October 29 episode of "The Weekly." The episode is available for viewing on demand.