Construction input prices increased 2.6% in February compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices rose 2.5% for the month.
Construction input prices are up 24.4% from a year ago, while nonresidential construction input prices are up 25.1%. Input prices for natural gas and unprocessed energy materials increased for the month, rising 65.1% and 32.3%, respectively. Crude petroleum prices increased 13.7% in February. All three energy subcategories are up significantly on a year-over-year basis.
“It will get worse before it gets better,” said ABC Chief Economist Anirban Basu. “Not only has Russia’s assault on democratic Ukraine created supply challenges in a number of categories, including oil and natural gas, but the reemergence of COVID-19 in parts of Asia and Europe is also poised to produce additional impacts. While many still expect commodity prices to decline later this year, the wait has been meaningfully extended by geopolitical conflicts and ongoing COVID-19 lockdowns.
“For contractors, this has the potential to put even more downward pressure on margins,” said Basu. “It is likely that, as bid prices continue to soar, more project owners will choose to delay project starts. The current state of affairs also creates complications for public agencies considering when to start large-scale infrastructure projects. It is a challenging time to begin such projects, given the workforce shortages that remain and materials price inflation. Undoubtedly, some public administrators will decide to extend planning time, delaying project start dates.
“Remarkably, many projects to date have continued to move forward,” said Basu. “Construction backlog, as measured by ABC’s Construction Backlog Indicator, has remained stable for several months in the wake of rapidly rising materials prices. It remains to be seen whether this stability can prove resilient in the face of additional, severe supply challenges.”
Related Stories
Architects | Jul 25, 2017
AIA 2030 Commitment expands beyond 400 architecture firms
The 2016 Progress Report is now available.
Market Data | Jul 25, 2017
Moderating economic growth triggers construction forecast downgrade for 2017 and 2018
Prospects for the construction industry have weakened with developments over the first half of the year.
Industry Research | Jul 6, 2017
The four types of strategic real estate amenities
From swimming pools to pirate ships, amenities (even crazy ones) aren’t just perks, but assets to enhance performance.
Market Data | Jun 29, 2017
Silicon Valley, Long Island among the priciest places for office fitouts
Coming out on top as the most expensive market to build out an office is Silicon Valley, Calif., with an out-of-pocket cost of $199.22.
Industry Research | Jun 27, 2017
What does the client really want?
In order to deliver superior outcomes to our healthcare clients, we have to know what our clients want.
Industry Research | Jun 26, 2017
Time to earn an architecture license continues to drop
This trend is driven by candidates completing the experience and examination programs concurrently and more quickly.
Industry Research | Jun 22, 2017
ABC's Construction Backlog Indicator rebounds in 2017
The first quarter showed gains in all categories.
Market Data | Jun 21, 2017
Design billings maintain solid footing, strong momentum reflected in project inquiries/design contracts
Balanced growth results in billings gains in all sectors.
Industry Research | Jun 15, 2017
Commercial Construction Index indicates high revenue and employment expectations for 2017
USG Corporation (USG) and U.S. Chamber of Commerce release survey results gauging confidence among industry leaders.
Industry Research | Jun 13, 2017
Gender, racial, and ethnic diversity increases among emerging professionals
For the first time since NCARB began collecting demographics data, gender equity improved along every career stage.