Construction input prices rose 0.3% in January compared to December 2019 and are up 1.9% year over year, according to an Associated Builders and Contractors (ABC) analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices were flat for the month and are up 1.8% on a year-over-year basis.
Natural gas prices were down both for the month (-14.3%) and for the year (-43.1%). The price of unprocessed energy materials was down 5.7% compared to December 2019 and down 13.1% on a year-over-year basis. Iron and steel (2.8%) was the only subcategory that experienced a monthly increase greater than 1%, but is still down 11.9% for the year. Among 11 subcategories, six experienced year-over-year price decreases.
“As predicted, construction materials prices are rising only gradually in the aggregate and have actually decreased in a number of categories,” said ABC chief economist Anirban Basu. “America’s shale revolution has kept both oil and natural gas prices low, even in the midst of ongoing global tumult. Natural gas prices have declined by more than 40% over the past year.
“The coronavirus outbreak is likely decreasing the demand for raw materials since so many supply chains have been interrupted,” said Basu. “While that should conspire to drive prices lower in a number of categories during the weeks ahead, there may be certain construction components that inflate in price due to those very same supply chain interruptions. Nonetheless, contractors are not likely to face widespread surges in materials prices anytime soon. With a healthy 8.4 months of work under contract but not yet performed, according to ABC’s latest Construction Backlog Indicator, this is a favorable trend.”