An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices fell 1% from February to March, according to www.abc.org. On a year-over-year basis, the price of construction materials decreased 1.9%.
Nonresidential construction material prices fell 1.1% from February to March and decreased 2% compared with one year ago.
“Deflationary pressures are weighing on economies around the world during this period of pandemic,” says ABC Chief Economist Anirban Basu. “Demand for various items has dried up as much of the global economy remains in a period of suspended animation.
“Though fragmenting supply chains are also creating shortages for a number of inputs, many producers still have an incentive to deliver what they can to the marketplace in order to maintain some degree of cashflow,” Basu continues. “Accordingly, there has been more downward pressure on prices from weak demand than upward pressure from interrupted production.”
Basu says prices may surge later this year and cause issues for struggling contractors.
“Deflationary pressures are likely to persist into the summer,” he says. “That said, there may come a time during the third and fourth quarters of the current year when input prices begin to surge higher as construction projects come back to life in larger numbers during a period of flattened construction input inventories and lingering global supply chain issues. This has the potential to render circumstances for cash-strapped contractors even more dire. But for now, that scenario is highly speculative.”
