Construction Input Prices Fell 0.9% in November - Modern Distribution Management

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Construction Input Prices Fell 0.9% in November

Construction input prices fell 0.9% in November but remain 40% ahead of February 2020 pre-pandemic levels.
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Construction input prices fell 0.9% between October and November but remained 40% ahead of pre-pandemic prices from February 2020, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index released Dec. 9.

Nonresidential construction input prices fell 0.8%, according to ABC’s analysis.

Construction input prices are up 11.9% year-over-year, while nonresidential construction input prices are 11.5% higher compared to a year ago. Input prices were down in seven of the 11 subcategories that ABC monitors on a monthly basis, according to the analysis:

  • Natural gas experienced the largest decrease in prices, falling 15.8% in November.
  • Unprocessed energy prices fell 7.8%, while crude petroleum prices were down 2.3%.
  • Steel mill prices declined 3% and iron and steel prices dropped 2.4%.

“The decline in wholesale prices for many construction inputs is generally positive news,” ABC Chief Economist Anirban Basu said. “Increasingly, we are receiving news that construction input inflation has peaked as supply chains continue to normalize despite a range of geopolitical stressors. In November, much of the relief emerged from lower energy prices. According to ABC’s Construction Confidence Index, contractors are already expecting growth in sales and employment levels over the next six months; this report will do little to curb that optimism.

“As always, there is more to this report than meets the eye,” Basu added. “Prices for various economic services grew faster than expected, a reflection of a still very strong labor market associated with substantial compensation growth. Therefore, while supply chains may be improving, helping to moderate the price of physical inputs, contractors will continue to face elevated and rising human capital costs. This may explain why just as many contractors expect profit margins to decline over the next six months as expect them to expand.”

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