Construction Input Prices Rose 1.0% in January

Washington, DC, February 16, 2024-Construction input prices increased 1.0% in January compared to the previous month, according to an Associated Builders and Contractors analysis of the U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices increased 0.9% for the month.

Overall construction input prices are 0.4% higher than a year ago, while nonresidential construction materials prices are 0.7% higher. Prices increased in two of the three energy subcategories last month. Crude petroleum input prices were up 6.1%, while unprocessed energy materials prices were up 3.8%. Natural gas prices decreased 2.4% in January.

“Construction materials prices surged in January, ending a streak of three consecutive monthly declines,” said ABC chief economist Anirban Basu. “While this represents the largest monthly increase since August 2023, input prices are essentially unchanged over the past year, up less than half a percentage point. As a result of relatively tame input costs, a plurality of contractors expects their profit margins to expand over the next six months, according to ABC’s Construction Confidence Index.

“Additionally, the broader PPI measure of prices received by all domestic producers of final demand products and services rose 0.3% in January, well above the expected 0.1% increase,” said Basu. “This, along with the hotter-than-expected Consumer Price Index data released earlier this week, suggests that the Federal Reserve may keep interest rates elevated for longer than previously expected.”