Overall construction input prices rose 0.7% in February, slightly lower than the rate set in January, according to an Associated Builders and Contractors (ABC) analysis of Bureau of Labor Statistics data. Compared to February 2017, prices are up 5.2%. Nonresidential construction materials prices are also up 0.4% on a monthly basis and 4.9% compared to the same time last year.
Prices for all 11 subcategories increased year over year, and only three saw monthly declines. Crude petroleum saw the largest drop in price, falling 7.3% for the month, though it is up 16.6% on a year-over-year basis. Prices were also down for prepared asphalt, tar roofing and siding products (-4.9%) and nonferrous wire and cable (-2.6%). The largest monthly increase was in natural gas, which rose 23.5% in February. The rise in natural gas and drop in crude petroleum is a reversal of what was seen in January’s data.
“For the last several months, construction firms have become increasingly concerned about rising construction materials prices,” said ABC Chief Economist Anirban Basu. “Today’s data show those concerns are warranted. A confluence of factors will likely continue to push materials prices higher in the months to come. These factors include global monetary policy, which continues to help accelerate growth in much of the world, a strong U.S. construction market and a policymaking environment that has impacted the price of softwood lumber, steel and aluminum.
“Recently enacted tariffs are making headlines, but steel prices were already rising rapidly,” said Basu. “Based on today’s report, iron and steel prices rose 7.1% from February 2017 to February 2018. The price of steel mill products was up 4.8%, while the price of softwood lumber was up 15.6%.
“On top of materials price increases are, of course, expanding human capital shortfalls and rising compensation costs,” said Basu. “These factors have likely moderated near-term confidence among construction firms regarding profit margin growth in the midst of a healthy economy.”
Related Stories
Market Data | Feb 4, 2016
Mortenson: Nonresidential construction costs expected to increase in six major metros
The Construction Cost Index, from Mortenson Construction, indicated rises between 3 and 4% on average.
Contractors | Feb 1, 2016
ABC: Tepid GDP growth a sign construction spending may sputter
Though the economy did not have a strong ending to 2015, the data does not suggest that nonresidential construction spending is set to decline.
Data Centers | Jan 28, 2016
Top 10 markets for data center construction
JLL’s latest outlook foresees a maturation in certain metros.
Market Data | Jan 20, 2016
Nonresidential building starts sag in 2015
CDM Research finds only a few positive signs among the leading sectors.
Market Data | Jan 20, 2016
Architecture Billings Index ends year on positive note
While volatility persists, architecture firms reported healthy performance for 2015.
Market Data | Jan 15, 2016
ABC: Construction material prices continue free fall in December
In December, construction material prices fell for the sixth consecutive month. Prices have declined 7.2% since peaking in August 2014.
Market Data | Jan 13, 2016
Morgan Stanley bucks gloom and doom, thinks U.S. economy has legs through 2020
Strong job growth and dwindling consumer debt give rise to hope.
Hotel Facilities | Jan 13, 2016
Hotel construction should remain strong through 2017
More than 100,000 rooms could be delivered this year alone.
Market Data | Jan 6, 2016
Census Bureau revises 10 years’ worth of construction spending figures
The largest revisions came in the last two years and were largely upward.
Market Data | Jan 5, 2016
Majority of AEC firms saw growth in 2015, remain optimistic for 2016: BD+C survey
By all indications, 2015 was another solid year for U.S. architecture, engineering, and construction firms.