With the exception of energy prices, which are heavily influenced by a cocktail of geopolitics, weather and investor frenzy, construction materials prices should be reasonably stable during the months to come.
That is the conclusion of the Associated Builders and Contractors from its analysis of the latest U.S. Bureau of Labor Statistics Producer Price Index data.
Construction input prices in the US were unchanged in July relative to the previous month, while non-residential construction input prices fell 0.1% for the month.
Overall construction input prices are 3.1% lower than a year ago, while nonresidential construction input prices are 2.7% lower. However, prices increased in all three energy subcategories. Natural gas prices were up 11.0% in July, while crude petroleum and unprocessed energy materials prices increased 8.4% and 8.0%, respectively.
“Goods prices continue to stagnate in the context of improved supply chains and a sluggish global economy,” said ABC chief economist Anirban Basu. “It has been the improvement of supply chains that best explains recent positive economic outcomes in the U.S. economy. As supply chains have normalized, unmet demand has been more readily satisfied. That has propelled transactional volume and economic growth. At the same time, the improved supply chain has helped push prices lower, contributing to the disinflation observable both in yesterday’s consumer price index data and today’s producer price index release.
Basu says that one exception may be construction equipment prices. The price of equipment expanded nearly 2% on a monthly basis in July and nearly 10% over the past year.
“Many contractors continue to complain about lengthy lead times for equipment as the nation continues to expand spending on infrastructure,” Basu added.
