Construction input prices increased 0.3% in October 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 increased 0.2% for the month.
Construction input prices are up 14.6% from a year ago, while nonresidential construction input prices are 14.2% higher. On a monthly basis, input prices were up in only three of 11 subcategories. Natural gas experienced the largest decline in prices, falling 37.8% in October. Crude petroleum prices increased 2.0%, while unprocessed energy materials prices were down 19.8%.
“Construction input prices inched higher in October, but that was largely due to an increase in petroleum prices,” said ABC Chief Economist Anirban Basu. “Certain categories, like steel mill products and iron and steel, experienced sharp price declines for the month. This is a welcome development for contractors, as just 31% expect profit margins to rise over the next six months, according to Associated Builders and Contractors’ Construction Confidence Index.
“For weeks, the conventional notion has been that peak inflation is behind us,” said Basu. “Today’s PPI report supports this and gives credence to the idea that the Federal Reserve will soon slow interest rate increases. But contractors should take a wait-and-see approach, at least until we have multiple months of data suggesting that peak inflation has in fact been achieved.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings, GDP and the Producer Price Index.
Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 21,000 members. Founded on the merit shop philosophy, ABC and its 68 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. Visit us at abc.org.