Industry News

Construction prices remain flat amid improved supply chains, sluggish economy

PPI Inputs to Construction Industries July 2017 through July 2023
Amid improved supply chains and sluggish global economy, construction input prices are flat in July, according to Associated Builders and Contractors (ABC).

Construction input prices were unchanged in July relative to the previous month, according to an Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices fell 0.1 percent for the month.

Overall construction input prices are 3.1 percent lower than a year ago, while nonresidential construction input prices are 2.7 percent lower. However, prices increased in all three energy subcategories. Natural gas prices were up 11 percent in July, while crude petroleum and unprocessed energy materials prices increased 8.4 percent and eight percent, respectively.

“Goods prices continue to stagnate in the context of improved supply chains and a sluggish global economy,” says 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 [the] consumer price index data and [the] producer price index release.

“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,” says Basu. “One exception may be construction equipment prices. The price of equipment expanded nearly two percent on a monthly basis in July and nearly 10 percent over the past year. Many contractors continue to complain about lengthy lead times for equipment as the nation continues to expand spending on infrastructure.”