Construction input prices decreased 1.4% in August compared to the previous month, 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 1.4% for the month as well.
Construction input prices are up 16.7% from a year ago, while nonresidential construction input prices are 16.3% higher. Input prices were up in six of 11 subcategories* on a monthly basis. Natural gas prices increased 35.3% (and are 457.9% higher than they were in February 2020), followed by unprocessed energy materials prices, which rose 13.5%. Crude petroleum prices were down 5.3% in August.
"Until yesterday's Consumer Price Index report, investors and other market-watchers had been delighted by recent inflation news," said ABC Chief Economist Anirban Basu. "Today's Producer Price Index report supplies additional evidence that wholesale inflation is edging lower from the highs observed earlier this year. While this may create a sense of relief among contractors, this is no time for complacency.
"With COVID-19 lockdowns persisting in China, the world's leading manufacturer, and Europe facing severe energy crises, supply chain disruptions will persist," said Basu. "That suggests that construction materials and equipment prices are likely to remain elevated even if year-over-year price increases moderate. Public construction workers remain in short supply, including in the category of public construction. The upshot is that inflation is poised to remain stubbornly high even as some begin to declare victory. Estimators and others in the construction industry should be on guard for occasional surges in inflation during the months ahead."
Based on ABC's Construction Confidence Index and Backlog Indicator, many contractors expect to pass along their cost increases to project owners during the months ahead," said Basu. "Some contractors may be in for a rude surprise. With borrowing costs rising and risk of recession elevated, it is perfectly conceivable that project owners will become increasingly resistant to elevated charges for the delivery of construction services. Based on nonresidential construction spending data, that process has already begun. Accordingly, contractors should remain laser-focused on cashflow and weeding out costs as opportunities arise."
![PPI Table Aug 22](/sites/default/files/inline-images/PPI_Table_Aug_22.jpeg)
![PPI Graph Aug 22](/sites/default/files/inline-images/PPI_Graph_Aug_22.jpeg)
Related Stories
Building Team Awards | Apr 10, 2015
Virtual collaboration helps complete a hospital in 24 months
PinnacleHealth needed a new hospital STAT! This team delivered it in two years, start to finish.
Building Team Awards | Apr 10, 2015
New arts venue reinvigorates Virginia Tech's campus
The STV-led Building Team creates a world-class performance and arts venue with learning and entrepreneurial dimensions.
Building Team Awards | Apr 9, 2015
Multifaced fitness center becomes campus landmark
A sloped running track and open-concept design put this Building Team to the test.
Building Team Awards | Apr 9, 2015
Nation's first LEED-certified bus depot
A bus garage in Harlem shows that even the most mundane of facilities can strut its environmentally sensitive stuff.
Building Team Awards | Apr 9, 2015
Setting the bar for port-of-entry design
Whenever you eat a tomato from Mexico, there’s a one-in-three chance it came through this LEED Gold gateway.
Building Team Awards | Apr 9, 2015
Big D’s billion-dollar baby: New Parkland Hospital Tops the Chart | BD+C
Dallas’s new $1.27 billion public hospital preserves an important civic anchor, Texas-style.
Building Team Awards | Apr 9, 2015
IPD-driven fusion facility serves science and student life in Chicago
In dire need of modern science labs and a student union, North Park University built both—in the same building.
Building Team Awards | Apr 9, 2015
‘Prudent, not opulent’ sets the tone for this Catholic hospital
This Building Team stuck with a project for seven years to get a new hospital built for a faithful client.
Building Team Awards | Apr 9, 2015
9/11 museum triumphs over controversy
The Building Team for this highly visible project had much more than design, engineering, and construction problems to deal with.
Building Team Awards | Apr 7, 2015
Unique test facility will help make wind power more feasible
A new facility at Clemson University makes it possible to test the huge stresses that large-scale wind turbines must be able to withstand.