Overall construction and nonresidential input prices both increased 0.1% in July compared to the previous month, according to a new analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data by Associated Builders and Contractors (ABC).
Overall construction input prices in July were 7.4% higher than one year ago, while nonresidential construction input prices are 7.2% higher. Meanwhile, prices decreased in two of the three energy subcategories. Crude petroleum prices decreased 11.9%, and unprocessed energy materials decreased 7.4%. Natural gas prices were up 10.4% in July.
“Construction input prices were virtually unchanged in July, but that relatively tame behavior can be traced to the dip in fuel prices that occurred at the start of the month,” said ABC Chief Economist Anirban Basu. “Diesel fuel prices, for instance, surged more than $0.50 per gallon from the week prices were measured for the index through the end of July. Given the subsequent rebound in oil prices and ongoing increases in certain materials prices, such as lumber and iron and steel, materials prices will almost certainly continue to climb in the months to come.
“Materials prices remained up more than 7% on a year-over-year basis in July,” he said. “Despite this significant annual increase and the prospect of ongoing inflation, contractors on net expect their profit margins to expand over the next six months, according to ABC’s Construction Confidence Index.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.
About Associated Builders and Contractors
Associated Builders and Contractors (ABC) is a national construction industry trade association established in 1950 with 67 chapters and 24,000 members. Founded on the merit shop philosophy, ABC helps members offer a robust employee value proposition, develop people, win work, and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work.
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