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Construction Input Prices Slip in March

Construction input prices are on the decline, yet the full impact of the coronavirus outbreak has not been accounted for since the Producer Price Index (PPI) from the Bureau of Labor Statistics pricing date on March 10. Input prices dropped 1% in March, according to the Associated Builders and Contractors (ABC).

"Deflationary pressures are weighing on economies around the world during this period of pandemic," said Anirban Basu, ABC chief economist. "Demand for various items has dried up as much of the global economy remains in a period of suspended animation."

Residential construction saw its first first-quarter decrease since the Great Recession, states the National Association of Home Builders (NAHB). Six of the 11 input subcategories saw year-over-year price decreases, according to ABC. Despite a slight monthly increase in iron and steel and steel mill products, each subcategory had double-digit declines year-over-year. Softwood lumber showed decent gains from month to month as well as year-over-year.

"Though fragmenting supply chains are also creating shortages for a number of inputs, many producers still have an incentive to deliver what they can to the marketplace in order to maintain some degree of cash flow," Basu said. "Accordingly, there has been more downward pressure on prices from weak demand than upward pressure from interrupted production.

-Michael Miller, managing editor

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Wednesday, 29 November 2023

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