Dive Brief:
- Construction material prices increased 0.3% between February and March, marking four consecutive 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 4.4%, leveling off slightly after two-consecutive months of sharp increases.
- Energy prices have been a key driver in material price hikes over the year, but March's report showed significant declines across five categories month-to-month. Natural gas dropped off 30% in March, but prices are still up 51.7% from the year-ago mark. Unprocessed energy materials slipped 14.6%, while crude petroleum prices declined 10.8% in March.
Dive Insight:
The rise in construction material prices likely slowed due to depressed confidence in U.S. economic growth for the coming year, according to ABC Chief Economist Anirban Basu. He said in a release that reports suggest the country's GDP for the first quarter will expand around 1%, coming in below expectations of 2% for 2017's first three months. A leveling off in energy prices, in turn, could drive materials price growth to moderate.
Basu also attributed some of the slowdown to predictions that the Trump administration's $1 trillion infrastructure plans could take a backseat to other items in the presidential agenda. While ABC economists had previously forecast that the infrastructure package could lift concrete and other material prices, speculation about the plan's delay could be hampering demand for such inputs.
Still, Basu said industry leaders should concentrate on the rising cost of doing business, as wages increase amid the skilled labor shortage, and limited inventory and the scarcity of workers continue to limit firms' capacities to maintain their margins.
