Construction Materials Prices Jump 0.4% in July
Construction input prices increased 0.4% in July compared to the previous month, according to an Associated Builders and Contractors analysis of federal data.
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Per the report, nonresidential construction input prices also increased 0.4% for the month.
ABC says overall construction input prices are 2.2% higher than a year ago, while nonresidential construction input prices are 2.6% higher.
In July, prices increased in 2 of the 3 energy categories last month. Crude petroleum and unprocessed energy materials prices were up 1.7% and 0.5%, respectively, while natural gas prices decreased 2.1% in July.
“Construction materials prices continued to increase too quickly in July,” said Anirban Basu, ABC chief economist. “Nonresidential input prices have risen at a 5.8% annualized rate since January, and trade policy will likely continue to put upward pressure on materials prices over the next several months.”
To illustrate, he noted that copper wire and cable prices, for instance, surged 5% in July and are now up 12.2% over the past year.
“While contractors remain relatively upbeat, according to ABC’s Construction Confidence Index, input price escalation may diminish profit margins during the final months of the year,” Basu said.
In addition, he said the rapid increase in broader producer prices in July is just as worrying as rising construction input costs.
“With prices for final demand goods and services rising at the fastest pace since March 2022, the Federal Reserve will have to consider the prospect of resurgent inflation when deciding whether or not to cut rates at its September meeting,” the ABC economist said. “The construction industry is in desperate need of lower borrowing costs, and higher rates for longer would continue to weigh on construction spending.”
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