Construction input prices expanded for the third consecutive month in May, according to Associated Builders and Contractors (ABC) analysis of the Bureau of Labor Statistics Producer Price Index.

Prices expanded by 0.7 percent for the month. The recent rise follows eight consecutive months during which construction input prices fell, and prices remain 3.4 percent below their year-ago level.

Nonresidential construction input prices expanded by 0.9 percent in May but are still 3.5 percent below their year-ago level. Price gains were largely driven by iron and steel prices and steel mill product prices, which expanded 5.8 percent and 4.6 percent for the month, respectively.

“After falling sharply during all of 2015 and into the early months of 2016, an increase in global commodities prices had to happen as markets firmed,” says ABC chief economist Anirban Basu. “While much attention has been given to the recent rise in oil prices to around $50 per barrel, other commodity prices have also experienced a resurgence, including iron ore.”

He adds, however, that the global economy continues to disappoint relative to expectations established at the start of the year.

“Higher prices may stimulate new rounds of production, including in energy markets, but the implication is that prices are unlikely to rise smoothly or dramatically going forward,” he says. “Analyst views regarding the direction of commodity prices diverge wildly. While supply and demand play a role in fashioning commodity prices, so too does the value of the U.S. dollar. U.S. interest rates remain low and in many cases have been declining. The dollar has correspondingly weakened in recent weeks. Should that continue, commodity price increases could be sharper than we presently anticipate.”