Dive Brief:
- Construction material prices dipped 0.6% between December and January and 2.7% year-over-year, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data released Wednesday.
- January marked the seventh-consecutive month of declines in construction industry inputs in the Producer Price Index.
- Only four of 11 input prices increased between December and January: nonferrous wire and cable; iron and steel; softwood lumber; and prepared asphalt, tar roofing and siding products. The remaining seven inputs saw prices drop last month.
Dive Insight:
ABC Chief Economist Anirban Basu attributed the continued slide in material prices to "a set of extraordinary circumstances" in the U.S. and global economies.
"Global commodity prices have been trending lower for months with limited, sporadic exception. The end of China’s construction bonanza has certainly contributed," he said in a release. "Decreased demand for inputs to construction ranging from copper to iron ore has served to flood global markets with excess supply, leading to falling prices. Significant oil production among OPEC and non-OPEC nations alike has collided with flat demand, helping to push energy prices lower."
Basu added that he expects construction input prices to remain low in the near future, as slow global economies will keep material costs down. He said that although declining prices bring their share of positives to construction companies in the midst of a building boom across the U.S., they are also causing significant damage to the energy sector and the states that rely on it.
