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
| Jul 22, 2013
Competitive pressures push academia to improve residences, classrooms, rec centers [2013 Giants 300 Report]
College and university construction continues to suffer from strained government spending and stingy commercial credit.
| Jul 22, 2013
Top K-12 School Sector Construction Firms [2013 Giants 300 Report]
Gilbane, Balfour Beatty, Turner top Building Design+Construction's 2013 ranking of the largest K-12 school sector contractors and construction management firms in the U.S.
| Jul 22, 2013
Top K-12 School Sector Engineering Firms [2013 Giants 300 Report]
AECOM, URS, STV top Building Design+Construction's 2013 ranking of the largest K-12 school sector engineering and engineering/architecture firms in the U.S.
| Jul 22, 2013
Top K-12 School Sector Architecture Firms [2013 Giants 300 Report]
DLR, SHW top Building Design+Construction's 2013 ranking of the largest K-12 school sector architecture and architecture/engineering firms in the U.S.
| Jul 22, 2013
Top University Sector Construction Firms [2013 Giants 300 Report]
Whiting-Turner, Turner, Skanska top Building Design+Construction's 2013 ranking of the largest university sector contractors and construction management firms.
| Jul 22, 2013
Top University Sector Engineering Firms [2013 Giants 300 Report]
Affiliated Engineers, URS, AECOM top Building Design+Construction's 2013 ranking of the largest university sector engineering and engineering/architecture firms in the U.S.
| Jul 22, 2013
Top University Sector Architecture Firms [2013 Giants 300 Report]
Cannon, Perkins+Will, Stantec top Building Design+Construction's 2013 ranking of the largest university sector architecture and architecture/engineering firms in the U.S.
| Jul 22, 2013
Top Office Sector Construction Firms [2013 Giants 300 Report]
Turner, Structure Tone, PCL top Building Design+Construction's 2013 ranking of the largest office sector contractors and construction management firms in the U.S.
| Jul 22, 2013
Top Office Sector Engineering Firms [2013 Giants 300 Report]
AECOM, Parsons Brinckerhoff, Jacobs top Building Design+Construction's 2013 ranking of the largest office sector engineering and engineering/architecture firms in the U.S.
| Jul 22, 2013
Market gains encourage better workplace design [2013 Giants 300 Report]
The commercial office sector is finally heating up, led by corporate headquarter and medical office building projects.