Construction Materials Prices Down Slightly in November

Construction input prices declined 0.9 percent in November compared to the previous month, according to an Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics Producer Price Index data recently released. Nonresidential construction input prices fell 0.8 percent for the month.

Construction input prices are up 11.9 percent from a year ago, while nonresidential construction input prices are 11.5 percent higher. Input prices were up in only four of the 11 subcategories on a monthly basis.

“The decline in wholesale prices for many construction inputs is generally positive news,” said Anirban Basu, chief economist for ABC. “Increasingly, we are receiving news that construction input inflation has peaked as supply chains continue to normalize despite a range of geopolitical stressors. In November, much of the relief emerged from lower energy prices. According to ABC’s Construction Confidence Index, contractors are already expecting growth in sales and employment levels over the next six months; this report will do little to curb that optimism.

“As always, there is more to this report than meets the eye,” said Basu. “Prices for various economic services grew faster than expected, a reflection of a still very strong labor market associated with substantial compensation growth. Therefore, while supply chains may be improving, helping to moderate the price of physical inputs, contractors will continue to face elevated and rising human capital costs. This may explain why just as many contractors expect profit margins to decline over the next six months as expect them to expand.”

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