Construction Input Prices Down in August and Potentially for Near Future

Nonresidential and overall construction input prices fell in August along with declining oil prices—good news for an industry facing higher labor costs.
In August, nonresidential construction input prices dropped 0.2% from the prior month and 1.7%, year-over-year, according to the Bureau of Labor Statistics Producer Price Index.
“With industry labor costs now rising aggressively and the subcontracting community generally busy, falling input prices help to moderate growth in total construction costs, allowing more projects to move forward and industry backlog to remain stable,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu.
A weak global economy and strong dollar are among the top reasons for reduced input prices, Basu said. Also, U.S. interest rates should increase more rapidly than in other nations, making the case for an even stronger dollar and, therefore, ongoing soft input prices. “While falling energy prices would negatively impact a number of regional economies across the U.S., the overall impact could be neutral to positive with respect to the durability of the current nonresidential construction cycle,” he said.
- Nicholas Stern, editorial associate

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