Energy costs drive construction input price increases

by Christopher Brinckerhoff | 28 August 2024 6:00 am

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Construction input prices increased 0.4 percent in July compared to June, according to an Associated Builders and Contractors (ABC)[2] analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices also increased 0.4 percent in July.

Overall construction input prices are 1.1 percent higher than a year ago, while nonresidential construction input prices are 0.8 percent higher. Prices increased in all three energy subcategories in July. Natural gas prices were up by 13.3 percent, while unprocessed energy materials and crude petroleum prices rose 6.2 percent and 5.5 percent, respectively.

Anirban Basu, chief economist at ABC, says, “Construction input prices increased in July, ending a streak of two consecutive monthly declines. Despite the monthly uptick, which was largely driven by higher petroleum and natural gas prices, input prices are up just 1.1 percent year over year. The lack of materials price escalation over the past 12 months is a welcome development for contractors, just 34 percent of whom expect their profit margins to expand over the next six months, according to ABC’s Construction Confidence Index[3]. Ongoing input price moderation, along with the prospect of lower interest rates by the end of the third quarter, should bolster contractor sentiment in the coming months.”

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