May's Producer Price Index shows a 0.0.% increase in prices for construction machinery and equipment compared to April, according to Associated Builders and Contractors. Prices for construction equipment were up 3.8% compared to May 2023 and 29.9% compared to May 2020.
Construction prices decreased 0.9% for the month and increased 2.1% compared to May 2023. Crude petroleum was down 8.7% over May and 7.6% over May 2023. Compared to May 2020, crude prices are up 57.9%.
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“For contractors, this data provides excellent news along two fronts,” said Anirban Basu, ABC chief economist in a statement. “First, construction input prices fell for the first time since December and, despite rising somewhat sharply over the first four months of 2024, are up just 2.1% year over year.
"Second, the Producer Price Index’s economywide measure of final demand prices fell in May. This, along with yesterday’s cooler than expected Consumer Price Index data, signals slowing inflation and that the Federal Reserve may begin to cut rates sooner than expected. With contractor confidence regarding profit margins at the lowest level in seven months according to ABC's Construction Confidence Index, falling materials prices and the prospect of lower interest rates in 2024 are welcome developments for the construction industry.”
