Construction input prices declined 0.6 percent in August compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices fell 0.4 percent for the month.
Despite the monthly decline, construction input prices are still 20.8 percent higher than a year ago. Nonresidential construction input prices expanded 21.6 percent during that period.
The price of natural gas has experienced the largest year-over-year increase, rising 132.2 percent, followed by the aggregate price of steel mill products, which increased 123.1 percent. Iron and steel prices have nearly doubled over the past year, increasing 95.2 percent. The prices of unprocessed energy materials and crude petroleum were also up, rising 79.2 percent and 74.8 percent, respectively.
No. 2 diesel fuel is up 67.2 percent.
“Though the headline number characterizing the direction of construction input prices appears favorable, many materials prices rose last month,” said chief economist Anirban Basu. “The overall decline in materials prices, which was small, was driven by two categories in which prices declined significantly: softwood lumber (-27 percent) and crude petroleum (-10 percent). But those were exceptions.
“Hopefully, currently elevated prices will induce suppliers to increase output in the short term and capacity over the longer term,” said Basu. “While supply chain disruptions, input shortages and high prices, which many contractors mentioned as factors affecting their backlog...are likely to persist into 2022, the laws of economics suggest that project owners and the contractors who work on their behalf will benefit from some price relief at some point next year.”