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Construction input prices failed to increase in January for the sixth consecutive month, according to a Producer Price Index analysis by the Associated Builders and Contractors (ABC). Prices dipped 2 percent in January, and on a year-over-year basis are down 3.6 percent.
Nonresidential construction input prices fell 2.1 percent on a monthly basis and 4.6 percent on a yearly basis.
“There are reasons to believe that prices will continue to be suppressed by a host of factors, including a strong U.S. dollar, the lack of supply response to the significant price declines and ongoing weakness in Europe, which is translating into low interest rates throughout the advanced world,” says ABC chief economist Anirban Basu. “In general, falling input prices are good for contractors since they tend to bolster margins, increase the likelihood that certain construction projects will move forward, and allow the Federal Reserve to maintain its accommodative monetary stance. For contractors who are involved in oil exploration and mining activities, the news is not nearly as positive.”
Eight of the 11 key construction inputs did not expand for the month, including fabricated structural metal product prices, which remained flat for the month and have expanded 1.2 percent on a year-over-year basis.
