An Associated Builders and Contractors analysis of information provided by the Bureau of Labor Statistics shows construction material prices increased 0.8% from June to July, according to www.abc.org. On a year-over-year basis, the price of construction materials decreased 0.6%.
Nonresidential construction material prices increased 0.8% from June to July and decreased 0.3% compared with one year ago.
“The decline in construction input prices over the past year represents one of the year’s great economic surprises,” says ABC Chief Economist Anirban Basu. “In 2017, when the global economy was immersed in a synchronized expansion, conventional wisdom held that materials prices would drift higher, including energy prices. Then simmering trade disputes offered at least the potential to further accelerate materials price increases, slimming construction firm profit margins at a time when many companies were already reporting rapidly rising worker compensation costs.
“While skilled and semi-skilled construction workers remain scarce, materials prices have tended to sag, including in categories impacted by tariffs,” Basu continues. “The result is that many contractors who had built significant materials price contingencies into their agreements with purchasers of construction services are experiencing lower than anticipated materials costs. All things being equal, that would tend to shift profit margins higher.”