Prices for construction materials see highest spike in two years

May 1, 2015 Laura McDaniel

As seen on Building Design + Construction:

Results from the Bureau of Labor Statistics showed that prices for construction materials rose 0.8% in March. According to Associated Builders and Contractors, Inc., it was the largest monthly increase in more than two years.

Prices for construction materials have risen for two straight months after falling for the previous six.

Although prices are up on a monthly basis, statistics showed that input prices are down 3.6% on a year-over-year basis, the fourth consecutive month this has occurred. The steady decline in input prices is the longest streak since 2009 as crude petroleum prices fell 4% in March and are down eight of the last nine months.

"Though U.S. nonresidential and residential segments continue to expand, global construction volumes remain suppressed by widespread weakness in Asia, Europe, and Latin America," said ABC Chief Economist Anirban Basu. "With the U.S. dollar likely to get stronger over the next few months as domestic interest rates begin to rise, there is little likelihood of significant increases in construction input prices over the next six to nine months. Overall producer prices managed to increase 0.5% on a monthly basis, the first increase since June 2014. This reading serves to increase the likelihood that the Federal Reserve will begin to increase short-term interest rates later this year."

There were only two key material categories that saw an increase in construction prices in March: fabricated strucutal metal produce prices (0.4%) and natural gas prices (1.5%).

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