According to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data released today, construction material prices rose another 0.8% in June and are 9.6% higher than they were at the same time one year ago.
June represents the latest month associated with rapidly rising construction input prices. Nonresidential construction materials prices effectively mirrored overall construction prices by rising 0.9% on a month-over-month basis and 9.8% on a year-over-year basis.
“In general, this emerging state of affairs is unfavorable,” said ABC Chief Economist Anirban Basu. “Rapidly rising materials prices interfere with economic progress in numerous ways, including by making it less likely that a particular development will move forward. They also increase the cost of delivering government-financed infrastructure, raise costs for final consumers such as homeowners, renters and office tenants, and exacerbate overall inflationary pressures, which serves to push nominal borrowing costs higher.
“Materials prices are up roughly 10% in just one year, and certain categories have experienced significant rates of price increase,” said Basu. “Among these are key inputs that appear to have been impacted by evolving policymaking, including the price of crude petroleum, which is up 49% over the past year, iron and steel, which is up nearly 14%, and softwood lumber, up 23%.
“Some contractors may note the similarities between the current period and the period immediately preceding the onset of the global financial crisis,” said Basu. “Materials prices, for instance, were rising rapidly for much of 2006 and 2007 as the economic expansion that began in 2001 reached its final stages. Today’s data will provide further ammunition for policymakers committed to tightening monetary policy and raising short-term interest rates.
“With no end in sight regarding the ongoing tariff spat between the United States and a number of leading trading partners, and with the domestic economy continuing to expand briskly, construction input prices are positioned to increase further going forward, though the current rate of increase appears unsustainable.”
Related Stories
Market Data | Mar 14, 2019
Construction input prices rise for first time since October
Of the 11 construction subcategories, seven experienced price declines for the month.
Market Data | Mar 6, 2019
Global hotel construction pipeline hits record high at 2018 year-end
There are a record-high 6,352 hotel projects and 1.17 million rooms currently under construction worldwide.
Market Data | Feb 28, 2019
U.S. economic growth softens in final quarter of 2018
Year-over-year GDP growth was 3.1%, while average growth for 2018 was 2.9%.
Market Data | Feb 20, 2019
Strong start to 2019 for architecture billings
“The government shutdown affected architecture firms, but doesn’t appear to have created a slowdown in the profession,” said AIA Chief Economist Kermit Baker, Hon. AIA, PhD, in the latest ABI report.
Market Data | Feb 19, 2019
ABC Construction Backlog Indicator steady in Q4 2018
CBI reached a record high of 9.9 months in the second quarter of 2018 and averaged about 9.1 months throughout all four quarters of last year.
Market Data | Feb 14, 2019
U.S. Green Building Council announces top 10 countries and regions for LEED green building
The list ranks countries and regions in terms of cumulative LEED-certified gross square meters as of December 31, 2018.
Market Data | Feb 13, 2019
Increasingly tech-enabled construction industry powers forward despite volatility
Construction industry momentum to carry through first half of 2019.
Market Data | Feb 4, 2019
U.S. Green Building Council announces annual Top 10 States for LEED Green Building in 2018
Illinois takes the top spot as USGBC defines the next generation of green building with LEED v4.1.
Market Data | Feb 4, 2019
Nonresidential construction spending dips in November
Total nonresidential spending stood at $751.5 billion on a seasonally adjusted annualized rate.
Market Data | Feb 1, 2019
The year-end U.S. hotel construction pipeline continues steady growth trend
Project counts in the early planning stage continue to rise reaching an all-time high of 1,723 projects/199,326 rooms.