“Given the ongoing malaise in both residential and nonresidential construction in the U.S., February’s price increases are noteworthy,” said Associated Builders and Contractors Chief Economist Anirban Basu. “A number of factors appear to be driving input prices higher, including a weakening U.S. dollar, ongoing expansion in the global economy and unrest in the Middle East.
“However, the data do not reflect the recent events in Japan. While the situation is heartbreaking, it may temporarily interrupt the upward move in overall materials prices. Japan is a large oil consumer and its economy is suffering in the aftermath of the earthquake and tsunami,” said Basu.
“Despite two decades of sluggish economic performance, Japan’s economy remains the third largest in the world. Once rebuilding efforts begin in Japan, materials prices may begin to rise again and actually increase to the point that they will be more substantial than they have been over the past five months,” Basu said.
“Moreover, several leading indicators of nonresidential construction activity in the U.S., including ABC’s own national Construction Backlog Indicator suggest that nonresidential construction volumes are set to trend higher, particularly during the latter half of 2011. That is likely to place additional upward pressure on materials prices later this year,” said Basu.