Oil Prices Contribute to March Surge in Construction Materials Prices

Construction input prices increased 2.2% in March compared to the previous month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data released today. Nonresidential construction input prices increased 2.3% for the month.

Overall construction input prices are 4.8% higher than one year ago, while nonresidential construction input prices are 5.4% higher. Prices decreased in 2 of the 3 energy subcategories last month. Natural gas and unprocessed energy materials prices were down 51.7% and 7.7%, respectively, while crude petroleum prices were up 20.2% in March.

“Construction materials prices surged in March and are now up 4.8% year over year, the largest annual increase since January 2023,” said ABC Chief Economist Anirban Basu. “This monthly increase is due to higher oil prices, a direct result of conflict in Iran, and it remains to be seen how that seismic geopolitical event will affect other input prices in the months to come.

“The rapid increase in diesel prices since late February, for instance, will raise shipping costs, putting upward pressure on virtually every construction material. Contractors remained confident that their profit margins would continue to grow, according to the March reading of the ABC Construction Confidence Index, and it will be interesting to see if that optimism persists in the event of prolonged oil market strife.”