1 minute reading time (260 words)

Construction Material Prices ‘Rising Rapidly’

Economic progress is dwindling in the eyes of Associated Builders and Contractors (ABC) economists who reported a nearly 10% gain in 2018 construction material prices in June over last year. ABC noted a 9.6% increase in prices compared to 2017, with a 9.8% gain in nonresidential construction, during its analysis of U.S. Bureau of Labor Statistics data released July 11.

Overall construction material prices and nonresidential construction prices increased 0.8% and 0.9%, respectively, month-over-month (MoM). In a press release, ABC Chief Economist Anirban Basu said the latest results were "unfavorable" and could potentially halt certain development projects. Crude petroleum saw the highest year-over-year (YOY) increase by more than 49%, followed by softwood lumber (23.2%) and iron and steel (13.5%). Natural gas was the only material to decline YoY; however, costs of crude petroleum and unprocessed energy materials decreased MoM.

Basu hinted at some similarities between what is occurring now versus what happened directly after the recession in the late-2000s.

"Material prices, for instance, were rising rapidly for much of 2006 and 2007 as the economic expansion that began in 2001 reached its final stages," he said in a statement. "[Wednesday's] data will provide further ammunition for policymakers committed to tightening monetary policy and raising short-term interest rates."

Based on the current readings, Basu predicted construction material prices will only continue to rise—albeit most likely at a slower rate—due in part to the tariffs implemented by the U.S. on goods from leading trading partners, such as China, the European Union and Mexico.

-Andrew Michaels, editorial associate

​For the latest construction credit news, visit NACM's Secured Transaction Services.

US Import Prices Down, Not Sustainable for Future
Strategic Global Intelligence Brief for July 13, 2...

Related Posts



No comments made yet. Be the first to submit a comment
Already Registered? Login Here
Wednesday, 12 August 2020