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 | Apr 30, 2018
Outlook mixed for renewable energy installations in Middle East and Africa region
Several major MEA countries are actively supporting the growth of renewable energy.
Market Data | Apr 12, 2018
Construction costs climb in March as wide range of input costs jump
Association officials urge Trump administration, congress to fund infrastructure adequately as better way to stimulate demand than tariffs that impose steep costs on contractors and project owners.
Market Data | Apr 9, 2018
Construction employers add 228,000 jobs over the year despite dip in March
Average hourly earnings increase to $29.43 in construction, topping private sector by nearly 10%; Association officials urge updating and better funding programs to train workers for construction jobs.
Market Data | Apr 4, 2018
Construction employment increases in 257 metro areas between February 2017 & 2018 as construction firms continue to expand amid strong demand
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 | Apr 2, 2018
Construction spending in February inches up from January
Association officials urge federal, state and local officials to work quickly to put recently enacted funding increases to work to improve aging and over-burdened infrastructure, offset public-sector spending drops.
Market Data | Mar 29, 2018
AIA and the University of Minnesota partner to develop Guides for Equitable Practice
The Guides for Equitable Practice will be developed and implemented in three phase.
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%.