Construction input prices remained unchanged on a monthly basis in October but are down 2.2% year-over-year, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices fell 0.1% for the month and are down 2.0% compared to the same time last year.
Falling energy prices accounted for much of the year-over-year price decline. Among the eight subcategories that decreased, the most significant were in natural gas (-31.8%), crude petroleum (-29.8%) and unprocessed energy materials (-26.3%). Monthly natural gas prices, however, were up 7.7% from September, likely due in part to seasonal factors. Two other subcategories had year-over-year decreases greater than 10%: iron and steel (-16.1%) and steel mill products (-13.1%).
“New month, same story on materials prices,” said ABC Chief Economist Anirban Basu. “While the decline in crude petroleum prices in October may have been caused by a spike in oil prices in September due to an assault on Saudi facilities, price weakness was apparent in several other materials categories as well. Many categories experienced effectively no change in price whatsoever on a monthly basis, including key materials such as softwood lumber, concrete, plumbing fixtures and the segment that includes prepared asphalt.
“While the U.S. nonresidential construction sector remains busy and a majority of contractors expect to see an increase in sales over the next few months, according to ABC’s Construction Confidence Indicator, materials prices continue to languish due to a combination of a weakening global economy, a sturdy U.S. dollar and recently observed declines in investment in structures. The lifting of tariffs on certain producers of steel and aluminum earlier this year may also be playing a factor, with iron and steel prices down approximately 16% compared to one year ago and the price of steel mill products down more than 13%.
“Contractors can expect more seesawing in materials prices going forward as opposed to smooth declines,” said Basu. “There is evidence that certain parts of the global economy are firming, which will help stabilize the demand for certain materials. The U.S. dollar is no longer strengthening as it had been, in part because the Federal Reserve has pursued an easier money policy this year. That said, there could be a dip in oil prices next year as more supply comes online from nations such as Canada, Norway, Brazil and Guyana.”
Related Stories
Market Data | Jan 7, 2022
Construction adds 22,000 jobs in December
Jobless rate falls to 5% as ongoing nonresidential recovery offsets rare dip in residential total.
Market Data | Jan 6, 2022
Inflation tempers optimism about construction in North America
Rider Levett Bucknall’s latest report cites labor shortages and supply chain snags among causes for cost increases.
Market Data | Jan 6, 2022
A new survey offers a snapshot of New York’s construction market
Anchin’s poll of 20 AEC clients finds a “growing optimism,” but also multiple pressure points.
Market Data | Jan 3, 2022
Construction spending in November increases from October and year ago
Construction spending in November totaled $1.63 trillion at a seasonally adjusted annual rate.
Market Data | Dec 22, 2021
Two out of three metro areas add construction jobs from November 2020 to November 2021
Construction employment increased in 237 or 66% of 358 metro areas over the last 12 months.
Market Data | Dec 17, 2021
Construction jobs exceed pre-pandemic level in 18 states and D.C.
Firms struggle to find qualified workers to keep up with demand.
Market Data | Dec 15, 2021
Widespread steep increases in materials costs in November outrun prices for construction projects
Construction officials say efforts to address supply chain challenges have been insufficient.
Market Data | Dec 15, 2021
Demand for design services continues to grow
Changing conditions could be on the horizon.
Market Data | Dec 5, 2021
Construction adds 31,000 jobs in November
Gains were in all segments, but the industry will need even more workers as demand accelerates.
Market Data | Dec 5, 2021
Construction spending rebounds in October
Growth in most public and private nonresidential types is offsetting the decline in residential work.