ABC: Construction materials costs increase
Spike is first in 9 months, group says
March brought the first increase in construction materials prices in nine months, according to an analysis by the Associated Builders and Contractors.
Using Bureau of Labor Statistics data, the association said materials prices rose 0.9 percent in March.
Despite the increase, on a year-to-year basis, prices are still down 3.4 percent.
ABC chief economist Anirban Basu said a 40 percent spike in the price of crude oil was to blame for most of the increase.
“Despite the rather profound percentage gain in oil prices and the overall nonresidential construction material price increase, rapid material price inflation remains unlikely going forward," Basu said. "There are a number of reasons for this, but perhaps the most important is the ongoing sluggishness of the global economy.”
It is hard to predict what will happen to commodity prices, Basu added.
"A number of oil-producing nations have either announced expected reductions in production and/or are actively seeking to enter agreements that freeze production," he said. "These occurrences have helped to stabilize a number of commodity prices, including oil and iron ore. However, there are no guarantees that meaningful production cut agreements will be reached and faithfully implemented by oil producers. While global oil production growth is likely to slow, demand will continue to be weak, implying an uncertain price trajectory."