Construction input costs were up 0.1 percent month over month in July and 7.4 percent annually, as contractors continue to face input price jumps and will for the foreseeable future as fuel prices and uncertainty forge ahead.
The data, which was released by the U.S. Bureau of Labor Statistics and analyzed by the Associated Builders and Contractors, showed that the increases were relatively insulated as lower energy costs, crude petroleum, and other unprocessed energy materials in particular offset costs.
“Construction input prices were virtually unchanged in July, but that relatively tame behavior can be traced to the dip in fuel prices that occurred at the start of the month,” said Anirban Basu, ABC chief economist in the release. “Given the subsequent rebound in oil prices and ongoing increases in certain materials prices, such as lumber and iron and steel, materials prices will almost certainly continue to climb in the months to come.”
As fuel prices increase and other material prices follow suit, these figures will be less muted. While crude petroleum and unprocessed energy materials were down 11.9 percent and 7.4 percent respectively, natural gas prices were up 10.4 percent and diesel also surged.
Price increases and ongoing inflation haven’t completely stalled the market as contractors, on average, still anticipate profit margins to grow over the next six months, though in time the rising input prices could slow project activity. Among the added factors are tariffs, uncertainty that continues to escalate.
“Construction firms are being hit with outsized cost increases for a host of materials and also labour,” said Ken Simonson, AGC chief economist. “Unless there is relief from tariffs or additional funding for highway and transit projects, both private and public construction work face cutbacks.”
