An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices fell 0.5% from October to November, according to www.abc.org. On a year-over-year basis, the price of construction materials increased 0.9%.
Nonresidential construction material prices fell 0.4% from October to November and increased 0.3% compared with one year ago. The higher increase in overall construction materials prices is largely attributable to softwood lumber prices, which are up 37.2% year-over-year.
“There has been some upward pressure on certain input prices in recent weeks, including energy prices,” said ABC Chief Economist Anirban Basu. “This is a natural outgrowth of a strong economic rebound from the earlier stages of the pandemic and efforts by a group of suppliers to constrain the supply of inputs, particularly of oil.
“There are now signs, however, that the pace of economic recovery in the U.S. and in many other parts of the world has slowed meaningfully,” Basu continued. “Employment growth has stagnated. The November reading of ABC’s Construction Backlog Indicator was the lowest level since the beginning of 2011. Further slowing is likely due to spiking infection rates among many nations. In the near-term, this will likely dampen the pace of input price inflation. There are also seasonal factors at work, as the winter months tend to be associated with reduced construction spending volumes.”
Basu says a surge in material prices is possible in 2021.
“While input price inflation is unlikely to represent a major challenge for contractors in the near-term, there is a possibility that input prices could surge at some point next year,” Basu said. “Once vaccinations become broadly available, the global economy is likely to gallop forward, creating significant growth in demand and driving prices higher.”
