A new Associated Builders and Contractors (ABC) analysis of statistics provided by the U.S. Bureau of Labor Statistics Producer Price Index data has shown a slight decline in construction input prices of 1.2% for the month of October. 

Per ABC’s analysis, Construction input prices are 1.1% lower than a year ago, while nonresidential construction input prices are recorded as being another 0.7% lower. Prices fell in 2 of the 3 energy subcategories last month, propelled by a drop in crude petroleum input prices of 2.9%. Unprocessed energy materials were also recorded to be down 0.3%, while natural gas prices rose 10.9% in October. Iron and steel prices also fell by 2.3% on the month overall. 

Only inputs to Industrial projects and multifamily housing construction was shown to have risen year-over-year, according to the ABC. 

“The October construction materials prices report should be cheered by most contractors,” ABC Chief Economist Anirban Basu said of the report. “Yesterday’s Consumer Price Index data and today’s Producer Price Index data indicate that inflation is declining. Not only does that translate into less rapid increases in the price of many key construction inputs, but it also signifies that the Federal Reserve is poised to begin reducing interest rates at some point next year. That will support an improving project financing environment, increasing demand for construction services in the process.

Basu continued: “That does not mean that all risks have disappeared. Among the reasons for inflation’s retreat is a slowing economy. While financial markets have been laser-focused on good news on the inflation front in recent days, less attention has been invested in the downside risks to the economy, including growing consumer indebtedness, tighter credit conditions, geopolitics and the impact of the federal government’s insatiable appetite to take on more debt.”

The index has recorded substantial increases in the price of all inputs Since February 2020, however. The latest ABC data indicates a 39.6% increase in all industry sectors since that time.