Overall construction input prices increased 23.1% from a year ago, as of July, according the U.S. Bureau of Labor Statistics Producer Price Index. Non-residential construction rose 23.4% in the same time period, with steel mill products soaring 108.6%. Energy prices also rose sharply, with natural gas up 146.7% and crude prude petroleum up 102.9%, year over year.
“Steel is a more significant input than lumber for most nonresidential contractors. With steel prices continuing to set new highs, contractors remain behind the curve in regard to passing on costs, even though lumber prices have tumbled and copper prices have dipped,” says Ken Simonson, chief economist at Associated General Contractors of America.
On a monthly basis, construction input prices increased 0.6%, while non-residential prices rose 0.8% and steel mill prices are up 10.8%.
“While it is quite likely that there will be less inflation a year from now, a rebounding economy, ongoing supply chain disruptions and limited productive capacity have conspired to generate rapid price increases,” Anirban Basu, chief economist at the Associated Builders and Contractors said. “Many economists insist that the current situation is merely temporary; still, today’s input price increases can meaningfully affect contractor fortunes by trimming margins and delaying the onset of projects.”
Alisa Zevin is the economics editor for Engineering News-Record, covering economic issues within the construction industry, including construction economics and ENR's quarterly cost reports. She is based in New York City.
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