Construction materials prices flat in June

Construction materials prices remained unchanged in June compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released today. Commercial construction input prices inched up 0.1% in June, and are 2.5% lower than a year ago. 

 Prices decreased in all three energy subcategories in June, led by crude petroleum whose prices were down 5.9%, Natural gas prices fell 5.3%. Unprocessed energy materials prices decreased 5.0% for the month. (See price chart at end of article.)

“The pandemic-induced period of rapid construction input cost increases is over,” said ABC Chief economist Anirban Basu. “Today’s Producer Price Index data, along with yesterday’s Consumer Price Index release, show that inflation has slowed, at least with regard to goods prices. This recent moderation is partially due to a drastic improvement in supply chains. Both international and domestic freight rates have plunged back toward pre-pandemic levels. 

Despite the recent cooling, construction input prices are still up more than 38% since the start of the pandemic, noted Basu. 

That’s over twice the increase observed for economywide prices over that span,” he added.  

Contractor confidence declined last month, according to ABC’s Construction Confidence Index. The combination of expensive materials, high interest rates that are likely to rise again at the Federal Reserve’s July meeting and tight credit conditions will put downward pressure on construction activity over the next few quarters, according to Basu.

Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 22,000 members.