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News Jan. 16, 2020

Construction material prices rose in December 2019

An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices rose 0.2% from November 2019 to December 2019, according to www.abc.org. On a year-over-year basis, the price of construction materials increased 1%.

Nonresidential construction material prices increased 0.3% from November 2019 to December 2019 and increased 1% compared with one year ago.

“With the global economy firming and demand for materials in the U.S. still elevated, contractors should expect gradual increases in materials prices going forward,” says ABC Chief Economist Anirban Basu. “ABC’s Contractor Backlog Indicator, which has hovered around nine months since August 2019, and Construction Confidence Index, which reported contractors remained confident about near-term prospects for sales and profit margins, both suggest that domestic demand will remain lofty through the first half of 2020.

“While input costs appear to be stabilizing after declining for much of the past two years, contractors face little risk of a spike in prices,” Basu continues. “This is especially true with respect to energy prices, which continue to remain stable even in the context of geopolitical turbulence. U.S. energy production continues to trend higher, helping to support historically low prices, especially for natural gas.”

Basu says trade deals likely will affect materials prices.

“Recent trade deals should also help moderate future materials price increases,” Basu says. “The first phase trade deal with China and progress on the new United States-Mexico-Canada Agreement, which replaced NAFTA, should help keep commodities moving across borders, moderating price pressures in the process.”

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