Dive Brief:
- Construction material prices fell 0.4% between October and November and 4.2% year-over-year, according to an Associated Builders and Contractors analysis of Burea of Labor Statistics data released Friday.
- November was the fifth consecutive month of declines in construction industry inputs in the Producer Price Index.
- Only four of 11 input prices rose between October and November: softwood lumber; prepared asphalt, tar roofing and siding products; plumbing fixtures and fittings; and concrete products. The remaining seven inputs saw price declines in November.
Dive Insight:
ABC Chief Economist Anirban Basu attributed the continued decline in material prices to "a stronger U.S. dollar, weak economic performance among major emerging countries like China, Brazil and Russia, ongoing softness in economies in Europe, OPEC’s recent decision to maintain high levels of output, elevated levels of oil and gas output from private companies wrestling with debt service payments and the impact of energy-saving technologies."
Basu predicted that prices could start to soon level off, but he said there likely will not be a major increase in prices anytime soon. The Federal Reserve's coming interest rate hike, which is expected to occur on Dec. 16, will also result in an even stronger U.S. dollar and limit the chances of input price inflation, he noted.
Last month, the BLS reported construction material prices slipped 0.2% between September and October and fell 4.6% year-over-year.
Despite possible negative implications about economies in other countries, the lower material prices could signal good news for builders looking to capitalize on the cheaper commodities during a construction boom across the U.S.
