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
| Mar 7, 2012
LEO A DALY opens new office in Riyadh, Saudi Arabia
Jay N. Kline, Regional Manager – Saudi Arabia, to lead new office.
| Mar 7, 2012
Turner appointed Batson-Cook CFO and treasurer
Cecil G. Hood to continue in advisory role.
| Mar 7, 2012
Thornton Tomasetti names Dowdall VP of Kansas City office
Dowdall will be responsible for supporting the Property Loss Consulting, Building Performance and Building Sustainability practices nationally.
| Mar 7, 2012
LEO A DALY selected to design Minnesota Fallen Firefighters Memorial
The bronze, figurative sculpture of a firefighter rescuing a child, which is currently on display at the Minneapolis/St. Paul International Airport, is lit by natural light through a circular void in the monolith.
| Mar 7, 2012
Houlihan Lokey adds Steffen to Industrials Group
Steffen bolsters group with experience in the building materials and rorest product sectors.
| Mar 6, 2012
Country’s first Green House home for veterans completed
Residences at VA Danville to provide community-centered housing for military veterans.
| Mar 6, 2012
EwingCole completes first design-build project for the USMA
The second phase of the project, which includes the academic buildings and the lacrosse and football fields, was completed in January 2012.
| Mar 6, 2012
Gensler and Skender complete new corporate headquarters for JMC Steel in Chicago
Construction was completed by Skender in just 12 weeks.
| Mar 6, 2012
BLT Architects promotes two to associate
Architect Nicole Dress and interior designer Jessica Moser acknowledged for excellence.
| Mar 6, 2012
Joliet Junior College achieves LEED Gold
With construction managed by Gilbane Building Company, Joliet Junior College’s Facility Services Building combines high-performance technologies with sustainable materials to meet aggressive energy efficiency goals.