New analytic reporting on U.S. Bureau of Labor Statistics Producer Price Index data for May from the Associated Builders and Contractors (ABC) has documented an overall 0.9% decrease in construction input prices.

For the month, nonresidential construction input prices fell by 0.8%. Overall construction and nonresidential construction input prices are 2.1% and 2.2% higher, respectively, than a year ago. The cost of concrete decreased slightly by 0.1%, while the cost of steel products rose by 0.5%. Gypsum product prices went up by 0.4%, and decreases were also recorded in 2 of the 3 energy subcategories.

"For contractors, this data provides excellent news along two fronts," said ABC Chief Economist Anirban Basu. "First, construction input prices fell for the first time since December and, despite rising somewhat sharply over the first four months of 2024, are up just 2.1% year over year. Second, the Producer Price Index’s economywide measure of final demand prices fell in May."

"This, along with yesterday’s cooler than expected Consumer Price Index data, signals slowing inflation and that the Federal Reserve may begin to cut rates sooner than expected," his statement continued. "With contractor confidence regarding profit margins at the lowest level in seven months according to ABC's Construction Confidence Index, falling materials prices and the prospect of lower interest rates in 2024 are welcome developments for the construction industry."