Oil prices drop, driving construction input costs down

by Christopher Brinckerhoff | 5 November 2024 6:00 am

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Construction input prices decreased 0.9 percent in September compared 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 also decreased 0.9 percent for the month.

Prices decreased in two of the three energy subcategories in September. Crude petroleum prices were down by 16.7 percent, while unprocessed energy materials prices were down 12.6 percent. Natural gas prices rose 2.4 percent in September. Overall construction input prices are 1.9 percent lower than a year ago, while nonresidential construction input prices are 2.1 percent lower.

“The decline in construction input costs observed in September was almost entirely due to a large decrease in oil prices,” said ABC chief economist Anirban Basu. “Certain materials like gypsum, fabricated structural-metal products, asphalt, and lumber exhibited sizable price increases for the month. While domestic freight rates are low by historical standards, elevated global container-shipping rates and emerging supply chain issues could put upward pressure on materials prices in the coming months. This represents a cause for concern for contractors, many of whom expect their profit margins to contract over the next six months, according to ABC’s Construction Confidence Index[2].”

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