United States. Construction input prices rose 0.6 percent in August and rose 3.7 percent year-on-year, according to an analysis by Associated Builders and Contractors Inc. (ABC) based on data released by the Bureau of Labor Statistics (BLS).
Prices of non-residential construction inputs behaved similarly, rising 0.6 percent in the month and 3.5 percent in the year.
Only three of the 11 key construction entry prices fell during the month. The entries that experienced price declines were steel products (minus 1.5 percent), prepared asphalt, tar roofs and siding products (minus 0.3 percent) and natural gas (minus 1.8 percent). Crude oil prices showed the biggest increase, rising 11 percent month-on-month and 15 percent year-on-year.
"If we consider what should be happening with respect to material prices, we would expect them to steadily go further," said Anirban Basu, chief economist at ABC. "After all, the global economic recovery is increasingly synchronized. China is on track to meet growth expectations this year. Europe, Japan, Brazil, Russia and other nations are experiencing significantly better recoveries this year compared to 2016. While some economies, such as Britain and India, have stumbled a bit lately, the broader story is one of faster global economic growth, driven largely by a low-interest-rate, post-austerity policy environment.
"The world's improving global economic environment has helped stabilize demand and prices for various products," Basu said. "As a result, we are not seeing the sharp declines in input prices that occurred during much of 2014 and 2015. Demand for materials in the U.S. also remains reasonably high, given continued momentum in a number of private segments and indications of stable activity among road builders. The fact that asset prices have risen, including in major global equity markets, has contributed to pushing material prices to higher levels, with positive wealth effects that lead to greater confidence among real estate developers."
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