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Rise in Nonresidential Construction Input Prices Raise Concerns

Construction input prices remained relatively low during the latter half of 2020, but December's nearly 2% increase in pricing has nonresidential contractors concerned.

Nonresidential construction input prices were the cause behind the unexpected increase, with a annual change of 2.7%, according to Associated Builders and Contractors (ABC). The 12-month percentage change in inputs to nonresidential construction was 2.4%.

"[Nonresidential contractors] are right to be concerned," ABC Chief Economist Anirban Basu said in a report. "After a period of low commodity prices and truncated supply, the global economy will eventually enter a post-pandemic world, fueling demand for materials and potentially driving prices higher. According to ABC's Construction Confidence Index, contractors expect profit margins to decrease over the next six months despite general optimism regarding sales."

The most significant month-over-month increases in nonresidential construction input prices came from crude petroleum and softwood lumber at 17.5% and 12.2%, respectively, while iron and steel also rose by nearly 8%. Steel mill products, nonferrous wire and cable, unprocessed energy materials, fabricated structural metal products, and concrete products also climbed by no more than 4%.

Natural gas, prepared asphalt, tar roofing and siding products, and plumbing fixtures and fittings were the only materials to decrease in price.

—Andrew Michaels, editorial associate

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Monday, 04 December 2023

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