ABC: Monthly Construction Input Prices for December 2023 Drop Sharply

According to an Associated Builders and Contractors estimate of US construction input prices, they fell 0.6% in December from the previous month.

The Bureau of Labor Statistics’ Producer Price Index data was issued today. Nonresidential construction input prices fell 0.4% in the month.

Overall construction input prices are 1.2% higher than a year earlier, while nonresidential construction input prices are 1.6% higher.

Last month, prices fell in two of the three energy subcategories. Crude petroleum input prices fell 13.2%, while unprocessed energy materials dropped 9.1%. Natural gas prices increased 1.5% in December.

“Construction input prices fell sharply in December,” Anirban Basu, ABC’s Chief Economist stated.

“While plunging oil prices are the primary factor behind the sharp decline, most input prices were tame in 2023’s final month. That serves as a fitting end to a year during which aggregate input prices increased just 1.2% and many individual commodity prices actually fell.”

“Despite continued materials price moderation and other positive developments regarding inflation, the outlook is not without risks,” Basu continued.

“Piracy in the Red Sea and the resulting diversion of ships from the Suez Canal around the Cape of Good Hope has caused global freight rates to nearly double in the first two weeks of 2024, according to the Freightos Baltic Index. All else equal, rising shipping costs will put upward pressure on certain inputs.”