Construction input prices increased 1.4% in November compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices also increased 1.4% for the month.
Construction input prices are up 23.5% from a year ago, while nonresidential construction input prices rose 24.5% over that span. All three energy subcategories increased significantly. Natural gas prices were up 150.6% compared to last year, while crude petroleum and unprocessed energy materials prices increased 115.2% and 113.6%, respectively. Prices also rose rapidly in the steel mill products (+141.6%) and iron and steel (105.1%) subcategories over the past year.
“Contractors are not the only people who should be concerned by today’s inflation figures,” said ABC Chief Economist Anirban Basu. “While contractors and the project owners they serve are most directly impacted by large, ongoing increases in materials prices, there are many other affected stakeholders. Among these are America’s taxpayers. Many are delighted by the passage of a consequential infrastructure package in November, yet rising materials prices mean that Americans may receive less value for each dollar spent. Rising labor costs point in the same direction.”
“There is no indication that materials prices will fall in the near future,” said Basu. “With the omicron variant now circulating around the world and leading to a next wave of lockdowns and supply chain disruptions, demand for key commodities will continue to exceed supply. Among the implications is that estimators will be under enormous pressure to predict materials prices amid enormous volatility and uncertainty. Many ABC members expect profit margins to decline over the next several months, according to ABC’s Construction Confidence Index, and today’s data release makes that more likely.”