Construction input prices declined 0.9% in November compared with the previous month, according to data from the U.S. Bureau of Labor Statistics’ Producer Price Index. On a year-over-year basis, construction input prices were 11.9% higher in November. Compared with pre-pandemic February 2020 levels, input prices were 40% higher in November 2022.
“The decline in wholesale prices for many construction inputs is generally positive news,” says Associated Builders and Contractors chief economist Anirban Basu. “Increasingly, we are receiving news that construction input inflation has peaked as supply chains continue to normalize despite a range of geopolitical stressors.”
According to ABC’s Construction Confidence Index, contractors are expecting growth in sales and employment levels over the next six months and Basu says the Producer Price Index “will do little to curb that optimism.”
“Prices for various services grew faster than expected, a reflection of a still very strong labor market associated with substantial compensation growth,” Basu says. “Therefore, while supply chains may be improving, helping moderate the price of physical inputs, contractors will continue to face elevated and rising human capital costs.”