Dive Brief:
- Construction material prices increased 0.7% between March and April, marking five straight months of growth, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data released Thursday.
- Material prices year-over-year rose 4.3% in April, remaining almost even with March's year-over-year figures.
- After a sharp downturn in March, energy prices swung back to nearly reach prices recorded in February. Natural gas increased 25.1% in April and notched a 74.1% year-over-year price gain. Unprocessed energy materials rose 14.1% in April, while crude petroleum prices climbed 15.7%. The only materials to see price dips last month were fabricated structural metal products (-0.4%) and iron and steel (-0.6%).
Dive Insight:
The continued rise in material prices comes in addition to already-high labor costs, according to ABC Chief Economist Anirban Basu. In a release, Basu noted that, with rising inflation and climbing compensation costs, owners today face less-favorable conditions for buying construction services than they have in recent years.
Economists predict that the Federal Reserve will likely raise short-term interests at its June meeting. With the U.S. unemployment rate dipping and material prices on the rise, these rate increases could stand to dampen developer's prospects. Still, critical material prices such as oil and copper have been on the decline, meaning such rate increases could be slow on the uptake, leaving nonresidential construction on solid ground, Basu said.
With the Trump administration's $1 trillion infrastructure plan seemingly on the backburner, demand for materials might not see the coming surge that some had predicted. ABC economists had previously forecast that the proposal could raise concrete and other input prices, but a lack of details and speculation that the plan could be sidelined for other campaign promises stand to dampen demand and take the pressure off of prices.
