By Associated Builders and Contractors
Construction input prices increased 0.7% in January compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices increased 0.6% for the month.
Overall construction input prices are 2.3% higher than a year ago, while nonresidential construction input prices are 2.9% higher. Prices increased in two of three energy categories last month. Crude petroleum and unprocessed energy materials prices were up 1.8% and 0.4%, respectively, while natural gas prices were down 2.9% in January.
“Nonresidential construction input prices rebounded in January, surging at a blistering 7.1% annualized rate for the month,” said ABC Chief Economist Anirban Basu. “While this sharp monthly rise can be traced to significant increases in prices for tariff-affected products like copper wire and cable, iron and steel, and industrial controls equipment, aggregate input price escalation is not particularly concerning right now. Nonresidential materials prices are up just 2.9% over the past year and have been virtually flat over the past several months, rising just 0.2% since September despite some large monthly fluctuations.
“Trade policy may continue to put upward pressure on certain input prices, especially those subject to the large Section 232 tariffs,” said Basu. “Even so, input escalation is unlikely to rise too sharply as long as energy prices remain tame and demand remains subdued. Contractor sentiment seems to reflect this; optimism regarding profit margins improved in January, according to ABC’s Construction Confidence Index, although it remains lower than one year ago.” (Source)