Construction material prices rose 0.2% in September and are up 0.3% on a year-over-year basis, according to Associated Builders and Contractors. Prices in September were 41% higher than in February 2020.
Nonresidential construction material prices also rose 0.2% August to September and increased 0.6% compared with one year ago. Softwood lumber prices are down 15.2% year over year and down 1.7% from August to September. Iron and steel prices are down 7.8% year over year and 2.4% for the month. Natural gas rose 0.1% from August to September and is up 36.9% since February 2020. Crude petroleum rose 10.1% for the month and is up 81.7% since February 2020.
“Today’s PPI report indicates that while inflationary pressures persist economywide, materials price increases are no longer at the heart of this bout of excess inflation,” said ABC Chief Economist Anirban Basu. “When inflation began to emerge in 2021, supply chains ill-prepared to handle surging demand for goods and services during the early stages of post-pandemic recovery were among the primary culprits. Today, inflation is driven less by supply chain issues and more by structural labor market dynamics and geopolitics. Many contractors continue to indicate that their primary challenge is securing sufficient levels of workers. That will not change anytime soon and could only be countered by a sharp downturn in construction activity.
“At this time, that sharp downturn is not anticipated,” Basu continued. “Rather, contractors continue to report healthy backlog, plentiful bidding opportunities and expectations for sales, employment and profit margin growth during the months ahead, according to ABC’s Construction Confidence Index. Over the past year, materials prices have been roughly flat, though certain segments like concrete have continued to experience upward price pressures. Renewed conflict in parts of the world that produce a considerable amount of global energy could put more pressure on contractors during the months ahead, but such things are difficult to predict.”
