Construction input prices fell 2.7% in December compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices also declined 2.7% for the month.
Overall construction input prices are 7.9% higher than a year ago, while nonresidential construction input prices are 7.6% higher. Crude petroleum prices fell sharply in December, down 14.9%, while natural gas prices surged 45.3%.
“This Producer Price Index data represents another positive development on the inflation front,” said ABC Chief Economist Anirban Basu. “However, this is both good and bad news. Recent consumer and producer price releases indicate that inflation is fading, though it remains well above the Federal Reserve’s 2% target. Should inflation continue to abate, the Federal Reserve may be able to stop increasing interest rates sooner than anticipated. Interest rate-sensitive segments like real estate and construction would be among the primary beneficiaries. Contractors are currently maintaining their longest backlog since 2019, according to ABC’s Construction Backlog Indicator.
“But the decline in input prices may also be a reflection of spreading economic weakness, both in the United States and other parts of the world,” said Basu. “Moreover, there could be bad news on inflation in the months ahead. War continues in Eastern Europe and the commodity use-intensive Chinese economy is in the process of reopening. Though there is evidence of improving supply chain functioning and moderation in input prices, contractors should not be tempted into complacency.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings, GDP and the Producer Price Index.
Related Stories
| Aug 11, 2010
SFI releases new sustainable forestry standard
The Sustainable Forestry Initiative has released a new standard. SFI 2010-2014 addresses climate change and bioenergy; strengthen unique SFI fiber sourcing requirements, which broaden the practice of sustainable forestry; complements SFI activities aimed at avoiding controversial or illegal offshore fiber sources, and embraces Lacey Act amendments to prevent illegal logging; and expands requirements for logger training and support for trained loggers and certified logger programs.
| Aug 11, 2010
Another steep decline in nonresidential construction activity projected for 2010
Despite signs that the overall U.S. economy is beginning to improve, nonresidential construction spending is expected to decrease by 13.4% in 2010 with a marginal increase of 1.8% in 2011 in inflation adjusted terms, according the American Institute of Architects' Consensus Construction Forecast. Commercial and industrial projects will continue to see the most significant decrease in activity. Thanks, in part, to federal stimulus spending, institutional building categories will fare better over the new year. BD+C, January 6
| Aug 11, 2010
WattStopper contributes freezer case occupancy sensor to DOE study
WattStopper has participated in a ground-breaking demonstration of solid-state lighting (SSL) technology combined with occupancy sensors in grocery store freezer cases. The project was supported under the U.S. Department of Energy (DOE) Solid-State Lighting GATEWAY Technology Demonstration Program. WattStopper contributed FS-705 Wide Angle PIR occupancy sensors to the project.
| Aug 11, 2010
Construction spending hits six-year low as employment declines in 324 of 337 cities
Construction employment declined in 324 out of 337 metropolitan areas over the past year as spending on construction projects dropped by over $137 billion in November to a 6-year low of $900 billion, according to a new analysis by the Associated General Contractors of America of federal figures released recently.
| Aug 11, 2010
New data shows low construction prices may soon be coming to an end
New federal data released recently shows sharp increases in the prices of key construction materials like diesel, copper and brass mill shapes likely foreshadow future increases in construction costs, the Associated General Contractors of America said. The new November producer price index (PPI) report from the Bureau of Labor Statistics provide the strongest indication yet that construction prices are heading up, the association noted.
| Aug 11, 2010
Underwriters Laboratories, ICC Evaluation Service announce dual evaluation and certification program for building products
Underwriters Laboratories (UL), the leading product safety testing organization, and ICC Evaluation Service, Inc (ICC-ES), the United States' leader in evaluating building products for compliance with code, today announced a partnership that will provide the building materials industry with a Dual Evaluation and Certification Program for building products.
| Aug 11, 2010
The New Yorker's David Owen: Why Manhattan is America's greenest community
David Owen is a staff writer at The New Yorker and the author of 14 books, most recently Green Metropolis: Why Living Smaller, Living Closer, and Driving Less Are the Keys to Sustainability, in which he argues that Manhattan is the greenest community in America. He graduated from Harvard and lives in Washington, Conn., where he chairs the town planning commission.
| Aug 11, 2010
Economic conditions to cause drag on cement consumption
The conditions facing the construction industry are likely to remain weak for another year or more, causing a drag on cement consumption, according to the most recent economic forecast from Skokie, Ill.-based Portland Cement Association (PCA).
