Construction input prices in the U.S. rose 0.4% in July from the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data. Nonresidential construction input prices also increased 0.4% for the month.
Over the past year, overall construction input prices are up 2.2%, while nonresidential construction costs have increased 2.6%. Energy costs drove some of the gains, with crude petroleum up 1.7% and unprocessed energy materials rising 0.5%. Natural gas prices, however, fell 2.1% in July.
“Nonresidential input prices have risen at a 5.8% annualized rate since January,” said ABC Chief Economist Anirban Basu. “Trade policy will likely continue to put upward pressure on materials prices. Copper wire and cable prices, for example, jumped 5% in July and are up 12.2% over the past year. While contractors remain relatively optimistic, these cost increases could squeeze profit margins in the final months of the year.”
Basu added that broader producer price increases are also a concern. “Prices for final demand goods and services rose at the fastest pace since March 2022. The Federal Reserve will need to weigh resurgent inflation when deciding on interest rates, which directly affects construction borrowing costs and spending.”
