Construction input prices jump 1.9% higher in July

ConDig (12-Aug-20).  US construction input prices increased 1.9% in July compared with the month prior as robust demand for materials such as softwood lumber 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. 

ABC reported that of 11 subcategories, four experienced monthly increases, with the largest price rise logged in softwood lumber, which rose 9.8% from June and 25.7% from July 2019. Prepared asphalt, tar roofing and siding products rose 2.3% and plumbing fixtures and fittings increased 2.2%. 

The largest drops were seen in the price of crude petroleum that was down 13.6%, followed by the price of unprocessed energy materials that were 7.4% lower and natural gas that saw a 1.5% drop.

“The global and national economies have been coming back to life despite the lingering pandemic, helping to push construction materials prices higher,” said ABC chief economist Anirban Basu. “However, materials prices are still 2.4% lower than they were a year ago, which is largely a reflection of the massive hit to global and national economic output registered during the second quarter of 2020.”

He aded that with the pace of economic recovery softening recently, materials prices are unlikely to surge higher in the near-term.

ABC noted that its Construction Confidence Index suggested that most contractors expect their profit margins to contract over the next six months as competitive bidding pressures have increased significantly in recent months.

“Correspondingly, with less room for error, unexpected increases in construction materials prices would have a more deleterious impact on contractor balance sheets than was the case pre-pandemic,” the association said.

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