Contractors Hot Line is part of the Catalyst Communications Network publication family.
Contractors Hot Line is part of the Catalyst Communications Network publication family.
Construction input prices fell by 0.9% in May compared to the previous month, according to an analysis by the Associated Builders and Contractors of the U.S. Bureau of Labor Statistics' Producer Price Index data released recently. Nonresidential construction input prices decreased by 0.8% during the same period.
Despite this monthly decline, overall construction input prices are still 2.1% higher than they were a year ago, with nonresidential construction input prices up by 2.2%. Within the energy subcategories, prices fell in two out of three areas last month: crude petroleum prices dropped by 8.7%, and unprocessed energy materials prices decreased by 6.6%. Conversely, natural gas prices rose by 1.7%.
“For contractors, this data provides excellent news along two fronts,” said ABC Chief Economist Anirban Basu. “First, construction input prices fell for the first time since December and, despite rising somewhat sharply over the first four months of 2024, are up just 2.1% year over year. Second, the Producer Price Index’s economywide measure of final demand prices fell in May. This, along with yesterday’s cooler than expected Consumer Price Index data, signals slowing inflation and that the Federal Reserve may begin to cut rates sooner than expected. With contractor confidence regarding profit margins at the lowest level in seven months according to ABC's Construction Confidence Index, falling materials prices and the prospect of lower interest rates in 2024 are welcome developments for the construction industry.”