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September Construction Input Prices Fall

Contractors wrapped up September with reports of falling construction input prices. According to Associated Builders and Contractors (ABC), input prices dropped more than half of a percent last month, decreasing nearly three times as much year-over-year (YOY).

ABC Chief Economist Anirban Basu said in the report "a weakening global economy, sturdy U.S. dollar and revolutions in technology across much of the energy spectrum" played a significant role in the decline. Meanwhile, nonresidential construction input prices fell more than half of a percent in September and declined nearly 1.5% YOY.

"The expectation is that materials prices will continue to remain weak absent a major geopolitical event," Basu noted. "Even the drone strike on Saudi Arabia's oil facilities, which caused oil prices to spike briefly, was insufficient to place meaningful upward pressure on prices."

In his analysis of September's Producer Price Index (PPI), Basu said ongoing issues with human capital are "bulking up" compensation costs, while woes of inflation are minimal, therefore, hindering the chances of an incline in the inflation rate.

"There is [also] growing concern that the overall cost increase associated with the delivery of construction services has resulted in a growing number of projects being delayed or cancelled,"Basu said in the report. "Much of this has to do with the lack of skilled workers, which has subcontractors scrambling for capacity."

—Andrew Michaels, editorial associate 

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Friday, 22 November 2019