Economy Watch: Construction Materials Costs Rising Rapidly
- May 14, 2018
Prices for construction materials were up 1.3 percent in April and are 6.4 percent higher than a year earlier, according to a report by the Associated Builders and Contractors, crunching Bureau of Labor Statistic data. That’s the largest month-over-month increase in almost three years and the largest year-over-year increase since October 2011, the organization noted.
Compared with a year ago, every category of “construction inputs”—which includes materials as well as energy costs—was up, except for natural gas, which saw a price decrease of 24.8 percent year-over-year (and flat month-over-month). Oil prices, on the other hand, were up 34.8 percent. As a rule, energy prices tend to be volatile.
Apart from energy prices, the construction material with the largest jump since last year was iron and steel, up 10.8 percent for the year. The price of softwood lumber, which has been at the heart of a trade dispute between the United States and Canada, has risen by 9.9 percent, ABC reported.
“Arguably, a number of policies are contributing to these burgeoning inflationary pressures,” said ABC Chief Economist Anirban Basu in a statement. “Shifting immigration policies are one factor, as are proposed tariffs, including on steel and aluminum.”
Basu also said there is upward pressure on wages—another major component of construction costs.
“As of March, there were 6.55 million unfilled job openings and 6.59 million unemployed people,” he noted. “This means that the ratio of unemployed to job openings is roughly 1, implying that wage pressures will continue to build,” he said.