Gains in Construction Input Prices Unlikely in Coming Months

The first two months of 2019 proved kind to the construction industry, where input prices increased monthly and annually. However, if the predictions of Associated Builders and Contractors (ABC) Chief Economist Anirban Basu are true, the sector will experience different results in the coming months.

Construction input prices have dwindled over the past five months—the last monthly increase occurring in October 2018, ABC reports. In February 2019, overall input prices saw a nearly 1% gain over the prior month and almost a 2% gain over this time last year. Nonresidential construction inputs were also up month-over-month (MoM) and year-over-year (YOY) by 1% and 2.7%, respectively.

According to the U.S. Bureau of Labor Statistics' Producer Price Index, softwood lumber and crude petroleum increased the most MoM, while natural gas and unprocessed energy materials fell significantly—the latter two also dropping YOY. Steel mill products and prepared asphalt, tar roofing and siding products were up YOY.

"With the global economy continuing to weaken, it is unlikely that materials prices will surge in the near term, despite a still very active U.S. nonresidential construction sector," Basu said in the report. "It is quite conceivable that much of the monthly increase in materials prices registered in February was associated with unusually severe winter weather in much of the nation. Difficulties involving transportation, for instance, have a tendency to push purchase prices higher."

Monthly increases in March and April are unlikely, Basu added.

—Andrew Michaels, editorial associate

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Tuesday, 22 October 2019

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