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BLS: Materials Prices Up Again in April

May 17, 2024
While iron, steel, asphalt and gypsum prices all fell, oil and copper price increases fueled the monthly increase.


WASHINGTON DC, May 14, 2024 -- The price of materials and services used in nonresidential construction increased 0.6% from March to April, according to data released Thursday by the U.S. Bureau of Labor Statistics (BLS).

“Prices for construction inputs have risen faster than contractors’ bids every month so far in 2024,” said Ken Simonson, chief economist for the Associated General Contractors of America (AGC). “In addition, persistently long lead times for electrical equipment are adding to the cost of many building and infrastructure projects. Meanwhile, inflexible rules for sourcing materials could drive up prices for federally aided projects such as highways.”

AGC officials cited a new survey of highway contractors that indicates inflexible federal 'Buy America' mandates could lead to future price escalations and other disruptions to highway projects.

The Producer Price Index (PPI) for new nonresidential construction—a measure of what contractors report they would charge to put up a specific set of buildings—edged up 0.1% in April. That increase followed an identical rise in March, no change in February, and a gain of 0.3% in January, Simonson noted. In contrast, input prices climbed 0.4% in each of the past three months and 0.9% in January.

Overall construction input prices are 2.3% higher than a year ago, while nonresidential construction input prices are 2.2% higher. Prices increased in two of the three energy subcategories last month. Crude petroleum prices were up 10.6%, while unprocessed energy materials prices increased 8.2%. Natural gas prices were down slightly by 0.9%.

“Construction input prices jumped half a percentage point higher in April and have increased 3.5% over the first four months of the year,” noted Anirban Basu, chief economist for Associated Builders and Contractors (ABC). “While iron, steel, asphalt and gypsum product prices fell in April, oil and copper prices surged, driving the monthly increase. Rising input prices will put pressure on profits at a time when nearly 1 in 4 contractors expect their margins to contract over the next two quarters, according to ABC’s Construction Confidence Index.

“Perhaps more importantly for contractors, the overall Producer Price Index reading for final demand goods and services increased 0.5% in April,” said Basu. “This is yet another sign that inflation is accelerating and suggests that interest rates are set to stay higher for longer.”