Geopolitics drive September price increases

In September, construction input prices increased by 0.2%, mainly due to rising energy costs.

Breakdown: Crude petroleum prices rose 10.1% and unprocessed energy materials rose 7.5%.

“Renewed conflict in parts of the world that produce a considerable amount of global energy could put more pressure on contractors during the months ahead, but such things are difficult to predict”, said Anirban Basu, Chief Economist at Associated Builders and Contractors (ABC).

Looking at HVAC: HVAC equipment prices rose slightly less than construction inputs last month, but are higher on a yearly basis. The Producer Price Index for HVAC equipment is up 4.6% year-over-year while construction inputs are roughly flat — up 0.3%.

Basu mentioned that while inflationary pressures persist across the economy, materials prices and supply chains aren’t the main culprits anymore. “Today, inflation is driven less by supply chain issues and more by structural labor market dynamics and geopolitics”.

Looking ahead: The ongoing, elephant-sized labor issue isn’t likely to change anytime soon, and could only be countered by a sharp downturn in business activity, which Basu doesn’t anticipate.

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