Construction input prices remained unchanged on a monthly basis in October but are down 2.2% year-over-year, 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 0.1% for the month and are down 2.0% compared to the same time last year.
Falling energy prices accounted for much of the year-over-year price decline. Among the eight subcategories that decreased, the most significant were in natural gas (-31.8%), crude petroleum (-29.8%) and unprocessed energy materials (-26.3%). Monthly natural gas prices, however, were up 7.7% from September, likely due in part to seasonal factors. Two other subcategories had year-over-year decreases greater than 10%: iron and steel (-16.1%) and steel mill products (-13.1%).
“New month, same story on materials prices,” said ABC Chief Economist Anirban Basu. “While the decline in crude petroleum prices in October may have been caused by a spike in oil prices in September due to an assault on Saudi facilities, price weakness was apparent in several other materials categories as well. Many categories experienced effectively no change in price whatsoever on a monthly basis, including key materials such as softwood lumber, concrete, plumbing fixtures and the segment that includes prepared asphalt.
“While the U.S. nonresidential construction sector remains busy and a majority of contractors expect to see an increase in sales over the next few months, according to ABC’s Construction Confidence Indicator, materials prices continue to languish due to a combination of a weakening global economy, a sturdy U.S. dollar and recently observed declines in investment in structures. The lifting of tariffs on certain producers of steel and aluminum earlier this year may also be playing a factor, with iron and steel prices down approximately 16% compared to one year ago and the price of steel mill products down more than 13%.
“Contractors can expect more seesawing in materials prices going forward as opposed to smooth declines,” said Basu. “There is evidence that certain parts of the global economy are firming, which will help stabilize the demand for certain materials. The U.S. dollar is no longer strengthening as it had been, in part because the Federal Reserve has pursued an easier money policy this year. That said, there could be a dip in oil prices next year as more supply comes online from nations such as Canada, Norway, Brazil and Guyana.”
Related Stories
Market Data | Jul 21, 2022
Architecture Billings Index continues to stabilize but remains healthy
Architecture firms reported increasing demand for design services in June, according to a new report today from The American Institute of Architects (AIA).
Market Data | Jul 21, 2022
Despite deteriorating economic conditions, nonresidential construction spending projected to increase through 2023
Construction spending on buildings is projected to increase just over nine percent this year and another six percent in 2023, according to a new report from the American Institute of Architects (AIA).
Building Team | Jul 18, 2022
Understanding the growing design-build market
FMI’s new analysis of the design-build market forecast for the next fives years shows that this delivery method will continue to grow, despite challenges from the COVID-19 pandemic.
Market Data | Jul 1, 2022
Nonresidential construction spending slightly dips in May, says ABC
National nonresidential construction spending was down by 0.6% in May, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Market Data | Jun 30, 2022
Yardi Matrix releases new national rent growth forecast
Rents in most American cities continue to rise slightly each month, but are not duplicating the rapid escalation rates exhibited in 2021.
Market Data | Jun 22, 2022
Architecture Billings Index slows but remains strong
Architecture firms reported increasing demand for design services in May, according to a new report today from The American Institute of Architects (AIA).
Building Team | Jun 17, 2022
Data analytics in design and construction: from confusion to clarity and the data-driven future
Data helps virtual design and construction (VDC) teams predict project risks and navigate change, which is especially vital in today’s fluctuating construction environment.
Market Data | Jun 15, 2022
ABC’s construction backlog rises in May; contractor confidence falters
Associated Builders and Contractors reports today that its Construction Backlog Indicator increased to nine months in May from 8.8 months in April, according to an ABC member survey conducted May 17 to June 3. The reading is up one month from May 2021.
Market Data | May 18, 2022
Architecture Billings Index moderates slightly, remains strong
For the fifteenth consecutive month architecture firms reported increasing demand for design services in April, according to a new report today from The American Institute of Architects (AIA).
Market Data | May 12, 2022
Monthly construction input prices increase in April
Construction input prices increased 0.8% in April 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.
