Construction Input Prices recede in May
Construction input prices fell 0.6% in May compared to the previous month on the Producer Price Index, the U.S. Bureau of Labor Statistics reported this morning
According to analysis from Associated Builders and Contractors (ABC), overall construction prices are also 3.7% lower than a year ago.
But sizeable fall-offs in lumber and steel prices are the culprits behind the combined pricing decline.
“The headline numbers suggest broad-based deflation in construction materials prices,” said ABC Chief Economist Anirban Basu. “But the declines in input prices are less broad than meets the eye. Much of the deflation is tied to energy, steel, and softwood lumber.
“Beyond those spheres, there is plenty of input price inflation,” Basu added.
Here’s how some construction input prices performed in the May report:
“In short, there are still supply chain challenges, but a weakening global economy has helped place downward pressure on several traded commodities,” Basu said. "With so many public and private megaprojects under development in the United States, it is likely that many input price categories will continue to show inflationary tendencies even if the overall economy dips into recession."
Construction Backlog holds steady
ABC has also reported that its Construction Backlog Indicator remained unchanged at a reading of 8.9 months in May.
The Indicator is based on an ABC member survey conducted from May 20 to June 7. The latest reading is just 0.1 months lower than in May 2022.
ABC’s Construction Confidence Index reading for sales and staffing levels moved lower in May while the reading for profit margins increased.
All three readings remain above the threshold of 50, indicating expectations of growth over the next six months, ABC said.
“During a period of ongoing tumult associated with major bank failures, a near-miss debt ceiling crisis and shifting monetary policy, nonresidential construction backlog has remained remarkably stable,” Basu noted. “At nearly nine months, backlog is essentially unchanged from a year ago and the previous month.
