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Dive brief:
- Construction input prices rose 0.4% in July, largely due to higher oil and natural gas prices, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics data released Tuesday.
- Overall construction and non-residential costs have stabilized over the past year, with increases of just 1.1% and 0.8%, respectively. However, these costs are still 40% higher than in February 2020, according to the report.
- “The lack of material price escalation over the past 12 months is a welcome development for contractors, only 34% of whom expect their profit margins to widen over the next six months,” said Anirban Basu , ABC chief economist. “Ongoing moderation in input prices, coupled with the prospect of lower interest rates at the end of the third quarter, should bolster contractor sentiment in the coming months.”
Diving knowledge:
According to the report, increases in energy prices drove most of the total increase in construction input costs over the past month.
For example, prices for all three energy subcategories rose in July. Natural gas prices rose 13.3%, while unprocessed energy materials and crude oil prices rose 6.2% and 5.5%, respectively.
But most other construction materials remained relatively stable, Macrina Wilkins, senior research analyst at Associated General Contractors of America, said in an email to Construction Dive.
For example, concrete products saw no significant price change during the month, while brick and structural clay tiles rose just 0.1%, according to the US Bureau of Labor Statistics. Construction machinery and equipment also rose 0.2 percent, the data showed.
However, volatility remains from a year-on-year perspective. According to the report, steel prices fell 14% over the past 12 months, while other commodities such as copper wire and cable rose around 13.9%.
