Article source: ConstructConnect
Graph 1 below shows the moderation in construction material costs that has been taking place. There’s about a 50-50 split between items with year-over-year price increases versus those with y/y declines.
But that’s December 2022 compared with December 2021. When the focus is narrowed to just the latest three months, the easing in prices is more evident. For the 15 input items, 11 experienced a drop in price from September to the end of 2022. And as for the four other items, none of the latest three-month increases was greater than +2.9%.
From Graph 2, the shout-out days of extraordinary y/y material cost increases, mainly in 2021, have now receded. In the Producer Price Index data series compiled by the Bureau of Labor Statistics, there are two specific material input indices, one with a longer history and a limited number of components, the other with a shorter history, but a more comprehensive make-up. (The two indices are explained more fully in a text box accompanying Graph 2.)
The average year-over-year change for those two indices has dropped to just +2.4%. The PPI ‘construction final demand’ index, generally taken to be equivalent to a ‘bid price’ index, has retreated a little, but remains elevated at +18.5% y/y.
