The Daily Dig
Construction input prices rose 2.2% in March compared to February, with nonresidential construction input prices climbing 2.3% over the same period, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released April 14.
Year over year, overall construction input prices are up 4.8%, the largest annual increase since January 2023. Nonresidential inputs are running hotter at 5.4% above a year ago.
The energy picture was mixed. Natural gas prices dropped 51.7% and unprocessed energy materials fell 7.7% last month. Crude petroleum, however, surged 20.2% in March and is doing most of the damage. ABC Chief Economist Anirban Basu attributed the spike directly to conflict in Iran, noting the full impact on construction input costs is still unfolding.
Basu also flagged diesel as a pressure point. Prices have been rising since late February, pushing freight costs up across nearly every material category. Contractors reported in the March ABC Construction Confidence Index that they expected profit margins to keep growing, though Basu noted it will be worth watching whether that optimism holds if oil market volatility continues.
Snapshot:
Report: ABC Analysis of BLS Producer Price Index, March Data
Released: April 14
Overall Construction Input Price Change (Month): +2.2%
Nonresidential Input Price Change (Month): +2.3%
Overall Construction Input Price Change (Year Over Year): +4.8%
Nonresidential Input Price Change (Year Over Year): +5.4%
Largest Annual Increase Since: January 2023
Crude Petroleum Price Change (Month): +20.2%
Natural Gas Price Change (Month): -51.7%
Unprocessed Energy Materials Price Change (Month): -7.7%
Key Driver: Rising oil prices tied to conflict in Iran
Secondary Pressure: Diesel price increases since late February raising shipping costs
Contractor Sentiment: Margins expected to grow per March ABC Construction Confidence Index
Source Organization: Associated Builders and Contractors
Economist: Anirban Basu, ABC Chief Economist
TheJobWalk Thoughts
Diesel is the number to watch right now. It moves freight, and freight moves everything from structural steel to roofing material. If diesel stays elevated through Q2, escalation clauses are going to be a harder conversation on every bid table.
For subcontractors and suppliers pricing work this spring, locking in material costs early is a real risk management decision. The annual increase hasn't been this sharp in over two years, and the geopolitical pressure driving it isn't resolved.
Courtesy of ABC
Courtesy of ABC
