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News Nov. 14, 2019

Construction material prices were unchanged in October

An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices held steady from September to October, according to www.abc.org. On a year-over-year basis, the price of construction materials decreased 2.2%.

Nonresidential construction material prices decreased 0.1% from September to October and decreased 2% compared with one year ago.

“New month, same story on materials prices,” says ABC Chief Economist Anirban Basu. “While the decline in crude petroleum prices in October may have been caused by a spike in oil prices in September due to an assault on Saudi facilities, price weakness was apparent in several other materials categories, as well. Many categories experienced effectively no change in price whatsoever on a monthly basis, including key materials such as softwood lumber, concrete, plumbing fixtures and the segment that includes prepared asphalt.

“While the U.S. nonresidential construction sector remains busy and a majority of contractors expect to see an increase in sales over the next few months, according to ABC’s Construction Confidence Indicator, materials prices continue to languish due to a combination of a weakening global economy, a sturdy U.S. dollar and recently observed declines in investment in structures,” Basu continues. “The lifting of tariffs on certain producers of steel and aluminum earlier this year may also be playing a factor, with iron and steel prices down approximately 16% compared to one year ago and the price of steel mill products down more than 13%.”

Basu says contractors likely will not see a steady decrease in materials prices.

“Contractors can expect more seesawing in materials prices going forward as opposed to smooth declines,” Basu says. “There is evidence that certain parts of the global economy are firming, which will help stabilize the demand for certain materials. The U.S. dollar is no longer strengthening as it had been, in part because the Federal Reserve has pursued an easier money policy this year. That said, there could be a dip in oil prices next year as more supply comes online from nations such as Canada, Norway, Brazil and Guyana.”

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