Dive Brief:
- Construction material prices fell 1.2% between November and December and 4% year-over-year, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data released Friday.
- December marked the sixth-consecutive month of declines in construction industry inputs in the Producer Price Index.
- Only four of 11 input prices increased between November and December: natural gas; prepared asphalt, tar roofing and siding products; concrete products; and fabricated structural metal products. The remaining seven inputs saw prices drop in November.
Dive Insight:
The continued decline in material prices was largely due to "global deflationary forces that have become increasingly apparent," ABC Chief Economist Anirban Basu said in a release. Basu was referring to the World Bank's prediction that the global economy will grow by less than 3% this year, below historic standards. A significant portion of that weak result is due to struggling economies in the emerging world, according to Basu.
He added, "With only a couple of exceptions, the U.S. is the only major nation to increase interest rates. If interest rates rise as anticipated, the dollar will strengthen further in 2016, placing additional downward pressure on input prices. Even significant geopolitical events involving oil producing nations has not been enough to stem the decline in oil or other commodity prices."
Last month, the BLS reported construction material prices slipped 0.4% between October and November and 4.2% 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.
