ABC: Construction Input Prices Decrease 1.2% in October, Driven by Lower Energy, Lumber and Steel Prices
Posted: November 17, 2023 | Tradewinds
Construction input prices declined 1.2% in October on a monthly basis, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released recently. Nonresidential construction input prices fell 1.1% for the month.
Construction input prices are 1.1% lower than a year ago, while nonresidential construction input prices are 0.7% lower. Prices fell in 2 of the 3 energy subcategories last month. Crude petroleum input prices were down 2.9%, while unprocessed energy materials were down 0.3%. Natural gas prices rose 10.9% in October. Iron and steel prices fell 2.3%.
“The October construction materials prices report should be cheered by most contractors,” said ABC Chief Economist Anirban Basu. “Yesterday’s Consumer Price Index data and today’s Producer Price Index data indicate that inflation is declining. Not only does that translate into less rapid increases in the price of many key construction inputs, but it also signifies that the Federal Reserve is poised to begin reducing interest rates at some point next year. That will support an improving project financing environment, increasing demand for construction services in the process.
“That does not mean that all risks have disappeared,” said Basu. “Among the reasons for inflation’s retreat is a slowing economy. While financial markets have been laser-focused on good news on the inflation front in recent days, less attention has been invested in the downside risks to the economy, including growing consumer indebtedness, tighter credit conditions, geopolitics and the impact of the federal government’s insatiable appetite to take on more debt.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.
Associated Builders and Contractors is a national construction industry trade association established in 1950 that represents more than 22,000 members. Founded on the merit shop philosophy, ABC and its 68 chapters help members develop people, win work and deliver that work safely, ethically and profitably for the betterment of the communities in which ABC and its members work. For more information visit abc.org.