WASHINGTON — Construction input prices rose 3.5% in January compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices increased 3.1% for the month.
Construction input prices are up 23.6% over the past 12 months, while nonresidential construction input prices rose 24.3%. Input prices for natural gas and unprocessed energy materials fell for the month by 26.1% and 4.7%, respectively. Crude petroleum prices increased 15.5% in January. All three energy subcategories are up significantly on a year-over-year basis.
“While many economists expect inflation to moderate over the course of 2022, as of now, there is effectively no relief in sight for the nation’s contractors,” said ABC Chief Economist Anirban Basu. “Inflation remains hot, hot, hot, with estimates of price increases repeatedly coming in above consensus expectations. There was a chunky increase in materials prices in January despite lower natural gas prices. There was also a bit of price relief in metals like iron and steel. But that was more than offset by categories registering price increases, including softwood lumber, plumbing fixtures, concrete and crude petroleum.
“It may seem naive given current data readings, but the expectation remains that, at some point later this year, construction materials prices will moderate.” said Basu. “As the pandemic fades, supply chains will become more orderly. There are already indications that shipping costs are headed lower, and contractors remain optimistic, according to ABC’s Construction Confidence Index. Undoubtedly, some project owners will choose to postpone start dates in the hope of securing lower bids during the months ahead. The question is how many months they will need to wait.”
The prices of goods used in residential construction ex-energy climbed 3.6% in January (not seasonally adjusted), according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics. The index was led higher by a 25.4% jump in softwood lumber prices and 9.0% price increases for indoor and outdoor paint.
The National Association of Home Builders points out that building materials prices increased 20.3%, year-over-year, and have risen 28.7% since January 2020. Over the past four months, the index has climbed 8.4%.