ABC: Construction Materials Prices Flat in July, Up 7.4% From a Year Ago

Overall construction and nonresidential input prices both increased 0.1% in July compared to the previous month, according to an Associated Builders and Contractors’ analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data.

Overall construction input prices are 7.4% higher than one year ago, while nonresidential construction input prices are 7.2% higher. Prices decreased in 2 of the 3 energy subcategories last month. Crude petroleum prices decreased 11.9%, and unprocessed energy materials decreased 7.4%. Natural gas prices were up 10.4% in July.

“Construction input prices were virtually unchanged in July, but that relatively tame behavior can be traced to the dip in fuel prices that occurred at the start of the month,” said ABC Chief Economist Anirban Basu. “Diesel fuel prices, for instance, surged more than $.50 per gallon from the week prices that were measured for the index through the end of July. Given the subsequent rebound in oil prices and ongoing increases in certain materials prices, such as lumber and iron and steel, materials prices will almost certainly continue to climb in the months to come.

“Materials prices remained up more than 7% on a year-over-year basis in July,” said Basu. “Despite this significant annual increase and the prospect of ongoing inflation, contractors on net expect their profit margins to expand over the next six months, according to ABC’s Construction Confidence Index.”