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Monthly, Yearly Input Prices See Significant Decline

To the delight of U.S. contractors, construction input prices not only dropped month-over-month (MoM) in August, but also year-over-year (YOY). According to Associated Builders and Contractors (ABC), MoM input prices were down more than half of a percent, while YOY input prices fell nearly 1%.

MoM and YOY input prices for nonresidential construction were at the forefront of these declines, both decreasing 0.4%. Natural gas, unprocessed energy materials and crude petroleum dropped significantly MoM and YOY, with softwood lumber, iron and steel, and steel mill products also seeing a major decline YOY.

"While there are a number of conceivable explanations for the decline in materials prices—including a weakening global economy—the degree to which each factor is responsible remains unclear," ABC Chief Economist Anirban Basu said in the report. "… A strong U.S. dollar is another factor that may have conceivably helped keep a lid on key import prices. Another is the ongoing shale revolution, which has positioned America for leadership positions in the production of both oil and natural gas. All of these factors are associated with a surprising lack of materials price inflation at a time of significant activity in the nation's nonresidential construction segment—a segment that remains associated with lengthy backlog and ongoing hiring."

—Andrew Michaels, editorial associate

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Wednesday, 26 February 2020