Construction material prices increased 0.4% in February and are up 2.6% on a year-over-year basis, according to www.abc.org.
Nonresidential construction material prices rose 0.4% from January to February and increased 2.8% compared with one year ago. Softwood lumber prices are down 45.1% year-over-year and up 3.5% from January to February. Iron and steel prices are down 15.1% year-over-year and up 2.9% for the month. Natural gas fell 41.4% from January to February and is up 68.9% since February 2020. Crude petroleum rose 7.3% for the month and is up 63.5% since February 2020.
“While the February construction materials price inflation data appear benign, a peek behind the headline numbers indicates that price pressures remain abundant,” said Associated Builders and Contractors Chief Economist Anirban Basu. “As an example, the price of brick and structural clay tile expanded 3.4% for the month and is up nearly 9% over the past year. The price of copper wire and cable increased 3.3% on a monthly basis and is up 40% since February 2020. In large measure, sharp declines in energy prices have pushed headline numbers lower in recent months, but there is plentiful evidence of lingering materials price inflation and supply chain challenges in the data.
“With growing pressure on the global banking system and the Federal Reserve still wrestling with excess inflation, risks of recession continue to expand,” Basu continued. “While contractors performing public construction and working on industrial megaprojects stand to fare well during the years ahead, the fortunes of many other contractors are increasingly threatened by elevated costs of capital, tightening financial conditions and the rising cost of delivering construction services. Eventually, these factors could whittle away at backlog, which is currently elevated, according to ABC’s Construction Backlog Indicator, creating greater challenges for contractors in 2024 and/or 2025.”