Construction input prices rise for sixth time in seven months

ABC analysis points finger at petroleum price rebound
Associated Builders and Contractors economist Anirban Basu.

Input prices – the cost of materials, labor and other overhead items – for all construction rose 0.2 percent in June, according to an analysis of Bureau of Labor Statistics data released by Associated Builders and Contractors.

This represents the sixth increase in construction input prices over the past seven months, although on a year-over-year basis, the prices are up 2.6 percent.

Specifically for nonresidential construction input prices rose 0.2 percent in June and are up 2.3 percent on a year-ago basis.

ABC economist Anirban Basu said much of the input price inflation in June was due to increased charges for crude petroleum, which registered a price increase approaching 9 percent. However, ABC pointed out, the rise followed a 19.6 percent dip in May, and oil prices have been lower during the first two weeks of July.

Seven of 11 key inputs were associated with monthly increases in prices in June. Only softwood lumber prices, which fell 3 percent for the month, experienced a meaningful decline.

“There has been a lot of talk this year about a more robust and synchronized global economic recovery,” said Basu. “However, underlying worldwide economic performance remains lackluster and add in the fact that America continues to grow around 2 percent and that Great Britain remains at elevated risk of recession, and the implication is that demand for productive commodities is not expanding briskly. Therefore, the modest rise in materials prices is precisely what one would expect to have transpired.”

Categories: Real Estate & Construction