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
| Jan 26, 2012
American Standard names Gould as president and CEO
Gould succeeds Don Devine, who led the successful turnaround of American Standard Brands.
| Jan 26, 2012
Summit Design+Build completes law office in Chicago
Applegate & Thorne-Thomsen's new office suite features private offices, open office area, conference rooms, reception area, exposed wood beams and columns, and exposed brick.
| Jan 24, 2012
New iPad app ready for prime time
Siemens’ versatile application connects users to APOGEE BAS control and monitoring functions via wireless network connectivity. The application directly interacts with BACnet/IP and Siemens APOGEE P2 field panels.
| Jan 24, 2012
Vyhanek joins Thornton Tomasetti’s Kansas City office
Vyhanek will assemble a new MEP team in the Midwest to support Building Performance and Property Loss Consulting practices.
| Jan 24, 2012
U of M installs new lighting at Crisler Player Development Center
Energy efficient lighting installed at PDC reduce costs and improves player performance.
| Jan 24, 2012
Rockingham County Judicial Center receives USGBC Gold NC v.2.2
The Rockingham facility is the first judicial center in North Carolina to seek certification from the U.S. Green Building Council’s LEED Building rating system.
| Jan 19, 2012
LEED puts the 'Gold' in Riverside golden arches
McDonald's restaurant recognized for significant energy savings.
| Jan 19, 2012
Odebrecht and Braskem bring sustainable award to U.S. university students
The Odebrecht Award for sustainable development rewards future leaders in engineering and chemistry.
| Jan 19, 2012
BOKA Powell-designed facility at Texas A&M Bryan campus
The new facility provides programs for the Texas A&M Health Science Center, the Texas Brain and Spine Institute, Mary Crowley Cancer Research Centers, and Blinn College Allied Health programs.
| Jan 18, 2012
ABI positive for second straight month
All regions except for the West showing improved demand for design services.