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
Industry Research | May 5, 2016
National survey reveals offices aren’t built to benefit employees
A Saint-Gobain and SageGlass Work Environment Survey found insufficient access to daylight, poor air quality, and distracting noise at workplaces as the major issues experienced by employees
Industry Research | Apr 15, 2016
Commercial construction starts jumped 18% in March
Nonresidential construction has gotten off to a hot start this year and looks to gain even more momentum throughout the spring.
Industry Research | Apr 14, 2016
Contractor confidence down, but not out
Despite a slight regression, nonresidential construction confidence is still in positive territory
Industry Research | Apr 7, 2016
CBRE provides latest insight into healthcare real estate investors’ strategies
Survey respondents are targeting smaller acquisitions, at a time when market cap rates are narrowing for different product types.
Industry Research | Apr 4, 2016
AIA: Public-private partnerships could solve nation’s public infrastructure crisis
A new white paper addresses the nation’s $3 trillion public infrastructure crisis and how public private partnerships offer a possible solution.
Retail Centers | Mar 16, 2016
Food and technology will help tomorrow’s malls survive, says CallisonRTKL
CallisonRTKL foresees future retail centers as hubs with live/work/play components.
Architects | Mar 11, 2016
AIA survey finds many women and minority architects still feeling underrepresented and unfulfilled
Dissatisfaction with “work-life balance” and compensation are cited as reasons why companies’ diversity strategies may be faltering.
Office Buildings | Feb 26, 2016
Benching, desking, and (mostly) paper-free: Report identifies top trends in workplace design for 2016
The report, from Ted Moudis Associates, encompasses over 2.5 million sf of workspace built over the past two years.
Multifamily Housing | Feb 24, 2016
Senior housing sector experiences record-setting year, says CBRE
Senior housing occupancy is at its highest level since 2007, and 2015 was a record year for sales and institutional transactions, according to CBRE.
Industry Research | Feb 22, 2016
8 of the most interesting trends from Gensler’s Design Forecast 2016
Technology is running wild in Gensler’s 2016 forecast, as things like virtual reality, "smart" buildings and products, and fully connected online and offline worlds are making their presence felt throughout many of the future's top trends.
