According to an Associated Builders and Contractors (ABC) analysis of the recently-released U.S. Bureau of Labor Statistics’ Producer Price Index data, construction input prices increased 1.5% in October. Nonresidential construction input prices have increased by 1.4% in the month. 

Compared to October 2020, construction input prices are 21.1% higher this year, with nonresidential input prices increasing by 22.3% over this period. Other major price increases since October 2020 include steel mill products increasing by 141.6% and iron and steel prices up 101.5%. The only decrease in prices over this timespan is softwood lumber. 

With this dramatic price increases, ABC Chief Economist Anirban Basu seems less optimistic about the construction industry's rebound compared to his projections in the summer. 

“Any notion that the bout of pandemic-induced inflation was simply transitory has gone by the wayside,” said ABC Chief Economist Anirban Basu. “Inflation continues to endure, particularly in multiple commodity categories that directly impact the cost of delivering construction services in America. These materials price increases are simply mind-boggling, with iron and steel prices up more than 100% over the past year.”

“Despite increased vaccination levels, global supply chain disruptions persist,” Basu continued. “Contractors should expect elevated prices well into 2022. According to ABC’s most recent Construction Confidence Index, the average contractor expects profits to decline over the next six months as the combination of high materials prices and an ongoing shortage of workers conspires to put pressure on margins.”