ConDig (10-Oct-18). US construction inputs increased 0.3% in September compared with the month prior in the wake of surging petroleum and unprocessed energy material costs, according to Associated Builders and Contractors (ABC) analysis of US Bureau of Labor Statistics data.
Costs were also up 7.4% on the same period last year.
The rise comes as crude petroleum and natural gas prices were both up on a monthly basis, 8.7% and 1.1%, respectively, while prepared asphalt, tar roofing and siding products were up 3.1%.
Overall prices for nonresidential construction inputs rose 0.4%, reversing last month’s downward trend.
“Last month, government data indicated that construction materials prices declined in August,” said ABC chief economist Anirban Basu.
“At that time, we viewed the one-month decline as an aberration. With the US construction industry remaining active, as demonstrated by recent patterns in hiring, demand for materials domestically remains strong.”
He added that a combination of global economic growth and geopolitical intrigue has helped to push certain commodity prices higher, including crude oil, which is up 47% year-over-year, and natural gas.
Key construction materials like steel and softwood lumber, which have been subject to increasing trade tensions, actually dipped 1.4% and 0.4% in September. But steel was up 12.2% on the year-ago period and softwood lumber up 5.4%. It comes as US tariffs imposed on foreign steel and aluminum remain in place despite new trade agreements being signed with the Mexico, South Korea and Canada.
The Associated General Contractors of America’s (AGC) said in March that the roll out of US import tariffs on steel and aluminum could result in the loss of 30,000 jobs in the construction industry as contractors will be forced to absorb increased costs.
“The more firms get squeezed by higher materials and labor costs, the less likely they are to continue hiring and investing in new equipment,” said Stephen E. Sandherr, the association’s chief executive officer said this week.
A survey the association released in August found that 80% of respondents reported difficulty filling hourly craft worker positions. As a result, 62% of firms report they are paying higher salaries to attract and retain workers.