Construction input prices fell in September but supply chain concerns loom

That’s according to an Associated Builders and Contractors (ABC) analysis of the US Bureau of Labour Statistics’ Producer Price Index.

The ABC found that construction input prices dropped 0.9% in September compared to the previous month, while non-residential prices also fell by 0.9%.

The price decreases were largely driven by a share fall in oil prices. Crude petroleum prices dropped by 16.7% during the month, while unprocessed energy materials prices were also down by 12.6%.

Overall construction input prices are 1.9% lower than a year ago, while non-residential input prices are 2.1% lower.

ABC chief economist Anirban Basu said, “The decline in construction input prices observed in September was almost entirely due to a large decrease in oil prices.

“Certain materials, like gypsum (+0.6%), fabricated structural-metal products (+0.5%), asphalt (+0.9%) and lumber (+0.3%) exhibited sizeable price increases for the month.”

But Basu warned that although domestic freight rates are low by historical standards, global container-shipping rates and emerging supply chain issues could push materials prices upwards in the coming months.

“That represents a cause for concern for contractors, many of whom expect their profit margins to contract over the next six months, according to ABC’s Construction Confidence Index,” said Basu.