Dive Brief:
- Construction material prices rose 0.7% between April and May but are 3.4% below the May 2015 level, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data released Wednesday.
- May marked the third consecutive month of increases in construction industry inputs in the Producer Price Index. Prices declined in the nine months before March.
- Only two of 11 input prices declined between April and May: concrete product and nonferrous wire and cable. The remaining nine material prices rose or held steady last month.
Dive Insight:
ABC Chief Economist Anirban Basu said that after the steep drop of material prices at the end of 2015 and in early 2016, a bump in prices "had to happen as markets firmed."
He added that experts have struggled to predict the future of commodity prices amid a fluctuating value of the U.S. dollar, low interest rates and lackluster growth in the global economy. If the dollar continues to be weak, "commodity price increases could be sharper than we presently anticipate," Basu said in a release. "While much attention has been given to the recent rise in oil prices to around $50 per barrel, other commodity prices have also experienced a resurgence."
Although low material prices can have positive effects for construction firms during a building boom, they were also causing significant damage to the energy sector and the areas that rely on it. Plummeting oil prices rocked certain Texas and North Dakota real estate markets, and they forced developers to put a massive Houston mixed-use project on hold.
