Overall construction input prices rose 0.7 percent in February, slightly lower than the rate set in January, according to an ABC analysis of Bureau of Labor Statistics data released. Compared to February 2017, prices are up 5.2 percent. Nonresidential construction materials prices are also up 0.4 percent on a monthly basis and 4.9 percent compared to the same time last year.
Prices for all 11 subcategories increased year over year, and only three saw monthly declines. Crude petroleum saw the largest drop in price, falling 7.3 percent for the month, though it is up 16.6 percent on a year-over-year basis. Prices were also down for prepared asphalt, tar roofing and siding products (-4.9 percent) and nonferrous wire and cable (-2.6 percent). The largest monthly increase was in natural gas, which rose 23.5 percent in February. The rise in natural gas and drop in crude petroleum is a reversal of what was seen in January’s data.
“For the last several months, construction firms have become increasingly concerned about rising construction materials prices,” said ABC Chief Economist Anirban Basu. “Today’s data show those concerns are warranted. A confluence of factors will likely continue to push materials prices higher in the months to come. These factors include global monetary policy, which continues to help accelerate growth in much of the world, a strong U.S. construction market and a policymaking environment that has impacted the price of softwood lumber, steel and aluminum.
“Recently enacted tariffs are making headlines, but steel prices were already rising rapidly,” said Basu. “Based on today’s report, iron and steel prices rose 7.1 percent from February 2017 to February 2018. The price of steel mill products was up 4.8 percent, while the price of softwood lumber was up 15.6 percent.
“On top of materials price increases are, of course, expanding human capital shortfalls and rising compensation costs,” said Basu. “These factors have likely moderated near-term confidence among construction firms regarding profit margin growth in the midst of a healthy economy.”