Prices for inputs to construction fell 0.5 percent in August but are 8.1 percent higher than at the same time one year ago, according to an Associated Builders and Contractors analysis of Bureau of Labor Statistics data released today. Nonresidential construction input prices fell 0.4 percent in August but are up 8.3 percent year-over-year. Softwood lumber prices plummeted 9.6 percent in August yet are up 5 percent on a yearly basis (down from a 19.5 percent increase year-over-year in July).
“Stakeholders will be tempted to look upon this month’s inputs to the construction Producer Price Index report as evidence that the cycle of rapidly rising prices is nearing an end,” said ABC Chief Economist Anirban Basu. “Prices of key inputs have been high for quite some time, which would tend to induce a larger supply of these items and, in turn, moderate prices.
“Some may also conclude that ongoing progress in trade negotiations with nations including Mexico and Canada has helped to moderate input prices. Still others might point to growing economic turmoil in nations like Turkey and Argentina. Economists would also note the likely impact of a strong U.S. dollar on import and commodity prices. While all of these are potential explanations, another possibility is that the August data are largely statistical aberrations. Metal prices continue to move higher on a monthly basis, with recently enacted tariffs representing a likely explanation.