Construction input prices rose 3.5% in March 2021, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices also increased 3.5% for the month.
Construction input prices are 12.9% higher than in March 2020, and nonresidential construction input prices are up 12.4% during that span. Natural gas and unprocessed energy materials experienced the largest year-over-year increases, rising 178.3% and 96.7%, respectively. Crude petroleum is up 90.6% compared to the same time last year, while softwood lumber prices are up 83.4%.
“Material prices continue to rise,” said ABC Chief Economist Anirban Basu. “With the global economy reawakening from its slumber, demand for key inputs is expanding. Meanwhile, supply continues to be constrained by many factors, including ongoing concerns regarding worker health, trade disputes, shifting global supply chains and political actions. “Intuition suggests that construction input price increases are likely to keep rising,” said Basu. “Vaccination programs are advancing in much of the world, unleashing pent-up demand for various goods and services in the process, and contractors are confident that their sales will increase over the next six months, according to ABC’s Construction Confidence Index. The International Monetary Fund indicates that the worldwide economy is poised for its fastest expansion ever measured, based on records dating back to 1980. While we will likely see further materials price increases going forward, the pace of increase may not be as rapid. As the COVID-19 pandemic fades, suppliers will be better positioned to respond to demand. That will help moderate price increases at some point, though in the very near-term, contractors should anticipate additional cost escalations.”