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Construction Input Prices Rises for Fourth Consecutive Month

To the dismay of construction professionals, construction input prices rose once more in July by nearly 2%, according to Associated Builders and Contractors (ABC). Data from the U.S. Bureau of Labor Statistics revealed the majority of the increase was from inputs to nonresidential construction at 1.8%.

Six out of the 11 subcategories saw lower prices, the most significant decline being crude petroleum at 13.6% followed by unprocessed energy materials, natural gas, iron and steel, steel mill products and fabricated structural metal products. Although concrete products was not impacted, softwood lumber increased nearly 10%, in addition to rising prices for prepared asphalt, tar roofing and siding products, plumbing fixtures and fittings, and nonferrous wire and cable.

"With the pace of economic recovery softening recently, materials prices are unlikely to surge higher in the near-term," ABC Chief Economist Anirban Basu said in a report. "Of course, there are always risks stemming from geopolitical events and/or shifting trade policy, but the macroeconomic conditions that would support sustained materials price increases are simply not in place presently."

Despite the unlikelihood of a sudden dramatic surge in material prices, Basu noted there are other risks present for contractors as many anticipate profit margins to contract in the next six months.

"Correspondingly, with less room for error, unexpected increases in construction materials prices would have a more deleterious impact on contractor balance sheets than was the case pre-pandemic," he said.

—Andrew Michaels, editorial associate

Existing-Home Sales Increase in July
Moderate Small Business Delinquencies Increase

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Sunday, 20 September 2020