Energy Prices Drive Material Costs Up in October
Analysis of U.S. Bureau of Labor Statistics data by the Associated Builders and Contractors shows that construction input prices increased 0.3% in October.
“Higher energy prices drove the increase in construction input prices observed in October,” said Anirban Basu, ABC Chief Economist “While prices for a few other materials, like concrete and copper products, also rose for the month, overall input prices are lower than they were one year ago and have fallen 5% since reaching an all-time high in June 2022.”
Prices increased in all three energy subcategories last month. Natural gas prices increased by 29.3%, unprocessed energy materials prices rose 9.9% and crude petroleum prices advanced by 7.3%.
Overall construction input prices are 0.2% lower than a year ago, while nonresidential construction input prices are 0.5% lower. In October, nonresidential construction input prices also increased 0.3% for the month.
“Heading into 2025, it’s unclear if prices will remain so well-behaved,” Basu said. “The next administration’s trade policy increases uncertainty regarding construction materials costs.”
Beyond the potential tariffs, he said input prices may rise in the short term if purchasers rush to import materials prior to the implementation of those policies.
However, as of October, contractors remains optimistic to expand their profit margins in the first quarter of 2025 according to ABC’s Construction Confidence Index. Basu said that portion of the index will bear close watching as trade policies shifts in coming months.
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