Construction input prices inch up in September, led by higher energy prices
Energy prices rose across the board in September.
Overall construction input (includes energy, materials and equipment) prices increased 0.2% in September compared to the previous month and were up 0.3% year-over-year, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index. (ABC is a national construction industry trade association established in 1950 that represents more than 22,000 members.)
Commercial construction input prices increased 0.1% for the month, and were up 0.4% year-over-year. Prices rose in all three energy subcategories in September. Crude petroleum prices were up 10.1%, along with unprocessed energy materials prices, which rose 7.5% last month. Natural gas prices were up slightly by 0.1% in September.
In other categories, prices were unchanged month-over-month in adhesives/sealants, brick and structural tile, and construction machinery and equipment.
Iron and steel prices fell 2.4% and steel mill products declined 3.7%. Lumber and wood prices declined 0.2%.
“Today’s PPI report indicates that while inflationary pressures persist economywide, materials price increases are no longer at the heart of this bout of excess inflation,” said ABC chief economist Anirban Basu. “Today, inflation is driven less by supply chain issues and more by structural labor market dynamics and geopolitics.”
Over the past year, materials prices have been roughly flat, though certain segments such as concrete have continued to experience upward price pressures, Basu added. In September, concrete product prices rose 0.8% month over month.
Many contractors continue to indicate that their primary challenge is securing sufficient levels of workers, added Basu. “That will not change anytime soon and could only be countered by a sharp downturn in construction activity.”
The good news is that, at this time, that a sharp downturn is not anticipated.
“Rather, contractors continue to report healthy backlog, plentiful bidding opportunities and expectations for sales, employment and profit margin growth during the months ahead, according to ABC’s Construction Confidence Index,” Basu said.