The short version
- — Construction input prices rose 0.1% in July, but are up 7.4% over the last year.
- — Energy costs were mixed; crude petroleum and energy materials declined, while natural gas increased 10.4%.
- — Material prices, including lumber and steel, are expected to continue climbing.
What happened
Overall construction input prices saw an increase of 0.1% in July compared to the preceding month, as reported by Contractor. Data from the Bureau of Labor Statistics indicates that these prices are 7.4% higher than they were one year ago. Nonresidential construction input prices also increased by 0.1% in July and are 7.2% higher over the last twelve months. Within the energy sector, prices for two out of three subcategories decreased last month, with crude petroleum prices dropping by 11.9% and unprocessed energy materials by 7.4%. However, natural gas prices climbed by 10.4% during July. Anirban Basu, ABC Chief Economist, noted that while fuel prices dipped at the start of the month, they rebounded afterward, and he anticipates continued increases in material prices, including lumber and iron and steel, in the coming months.
Why it matters to your shop
The slight monthly increase in overall input prices might seem minimal, but the significant 7.4% annual rise means that materials and supplies for your projects are still considerably more expensive than they were a year ago. Even with a short-term dip in some fuel costs, the rebound in oil and sustained increases in other key materials like lumber and steel indicate that budgeting for higher material expenses will remain critical for the foreseeable future. This environment demands constant attention to your cost projections for every job.
The volatility in energy prices, particularly the notable rise in natural gas, can impact your overhead and the cost of materials produced using energy-intensive processes. These fluctuating costs can directly influence the profitability of your bids if not accurately accounted for, making it difficult to maintain consistent pricing. It is important to stay informed about these trends to avoid absorbing unexpected cost increases that can erode your margins on projects already underway or those quoted based on older pricing.
What a CAA member does about it
In times of shifting material and energy costs, a CAA member protects their business and their clients by ensuring their project quotes accurately reflect current market prices. This means regularly updating your cost estimates, communicating clearly about potential price adjustments with clients before work begins, and detailing these agreements in a well-defined scope of work. By maintaining transparent communication and thorough documentation, you build trust and demonstrate the professional integrity that defines a CAA member, always delivering quality work at an honest price.
Reported by Contractor. This brief is an original CAA summary written for members; the facts belong to the original reporting.
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