ConDig (11-Jun-18). US construction inputs continued to post gains in May and nudged up 0.3% from the month prior amid robust demand for materials that outweighed the impact of price drops for natural gas and crude petroleum, according to Associated Builders and Contractors (ABC) analysis of US Bureau of Labor Statistics data.
The biggest increases was in nonferrous wire and cable and prepared asphalt tar, roofing and siding products at 1.2% and 1.1% respectively from the month before.
Key construction materials like iron and steel and softwood lumber, which have been subject to trade tensions, actually fell 2.1% and 0.4% respectively in May. Iron and steel was also down 4.1% on the same period a year earlier.
In May, President Trump struck a deal with Canada and Mexico to lift the 25% import tariffs on steel and aluminum.
“First, demand for materials remains high in the context of ongoing growth in nonresidential construction spending. This is especially true for a number of construction material intensive segments like highway and street. Indeed, prepared asphalt is the only category of construction materials that this report monitors that experienced a price increase exceeding 6% over the past year,” said ABC chief economist Anirban Basu.
“Second, there is the issue of tariffs, including those that have impacted steel and aluminum prices in recent months. Despite those surcharges on imported goods, no related categories are associated with significant inflationary pressure, though the price of fabricated steel products is up by a somewhat-above-average 2.8% over the past year. Third, there have been active attempts by certain groups of suppliers, including OPEC members, to truncate supply in an effort to raise prices. In large measure, those efforts have failed, with a host of commodity prices, including oil prices, declining recently.”
Nonresidential input prices were also up 0.3% compared with the previous month and 1.1% higher than they were a year ago.
Among the 11 subcategories, six saw prices fall last month, with the largest decreases in natural gas 15.2%, unprocessed energy materials -8.2% and crude petroleum -6.2%.