ABC: Construction input prices up in March 2022

Construction input prices rose 2.9 percent in March, according to an Associated Builders & Contractors (ABC) analysis of U.S. Bureau of Labor Statistics data.

Nonresidential construction input prices expanded 2.8 percent for the month, ABC says.

Construction input prices are up 24.4 percent from a year ago and 39.1 percent from February 2020, the month before the COVID-19 pandemic began to affect the economy. Nonresidential construction input prices are 25.0 percent and 39.2 percent higher over the same time frames, respectively.

Natural gas prices are up more than 200 percent since the start of the pandemic, while crude petroleum prices are up more than 100 percent over that span.

“Consumers are right to complain about inflation, which has been north of 8 percent during the past year,” says Anirban Basu, ABC’s chief economist. “But America’s contractors have experienced materials price inflation nearly three times that during the same period. For now, there are few signs of relief. Many prices rose on a monthly basis in March, reflecting ongoing upward price momentum, including iron and steel (1.4 percent), key roofing materials (1.6 percent) and nonferrous wire and cable (4.4 percent).”

Basu adds that despite recent growth in labor force participation nationwide, contractors continue to struggle to find skilled workers, while also contending with other ongoing headwinds.

“Supply chain setbacks related to the spread of another omicron variant along with the Russia-Ukraine war will also affect equipment availability,” he says. “The latest ABC Construction Confidence Index survey indicates that approximately three in four contractors have suffered an interruption in delivering construction services in recent months. These challenges will persist.

“There is one more significant consideration for contractors,” Basu adds. “With inflation running hot, the Federal Reserve will have to work even harder to slow the economy to trim price pressures and expectations. Recession risks are accordingly rising, and while that is unlikely to affect the level of contractor activity in the near term, that could eventually set the stage for a period when demand for construction services declines.”