Construction Input Prices Rise 2.6% in February

An Associated Builders and Contractors analysis of Producer Price Index data shows construction input prices are up 24.4% from a year ago.
Construction input prices February 2022

Construction input prices increased 2.6% in February compared to the previous month, according to an Associated Builders and Contractors analysis of the latest Producer Price Index data.

Nonresidential construction input prices rose 2.5% for the month. Construction input prices are up 24.4% from 2021, while nonresidential construction input prices are up 25.1%, according to ABC’s analysis.

In February, input prices for natural gas and unprocessed energy materials also increased, rising 65.1% and 32.3%, respectively. Crude petroleum prices increased 13.7% in February.

“All three energy subcategories are up significantly on a year-over-year basis,” according to the analysis.

“It will get worse before it gets better,” ABC Chief Economist Anirban Basu. said “Not only has Russia’s assault on democratic Ukraine created supply challenges in a number of categories, including oil and natural gas, but the reemergence of COVID-19 in parts of Asia and Europe is also poised to produce additional impacts. While many still expect commodity prices to decline later this year, the wait has been meaningfully extended by geopolitical conflicts and ongoing COVID-19 lockdowns.”

Basu said this has the potential to put even more downward pressure on margins for contractors. “It is likely that, as bid prices continue to soar, more project owners will choose to delay project starts,” he said. “The current state of affairs also creates complications for public agencies considering when to start large-scale infrastructure projects. It is a challenging time to begin such projects, given the workforce shortages that remain and materials price inflation. Undoubtedly, some public administrators will decide to extend planning time, delaying project start dates.”

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