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Yahoo
4 days ago
- Business
- Yahoo
Latest Producer Price Index report offers little relief
This story was originally published on Construction Dive. To receive daily news and insights, subscribe to our free daily Construction Dive newsletter. Dive Brief: Construction input prices ticked up 0.4% in July, the same increase for nonresidential inputs, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics' Producer Price Index data. Input prices now sit 2.2% higher overall and 2.6% higher for nonresidential construction compared to a year ago, according to the report. Copper wire and cable, for example, surged 4.9% in July and 12.2% year over year. That price escalation, fueled by trade policy, could compress contractor margins in the months ahead, even as builders still hold a relatively upbeat level of confidence, said Anirban Basu, ABC chief economist. Dive Insight: Rising tariff levels pushed nonresidential construction input prices higher for a third consecutive month, according to the Associated General Contractors of America. Duties on aluminum and steel, along with a more recent tariff on raw copper, have prompted suppliers to raise prices. Aluminum mill shapes jumped 7.4% for the month and 13.7% from a year ago. Meanwhile, copper and brass mill shapes increased 5.7% for the month and 6.9% year over year. Steel mill products slipped 0.5% in July, though they still sit 8.8% higher compared to July 2024, according to AGC. 'Steep tariff increases earlier this year… drove the producer price index for construction inputs higher,' said Ken Simonson, AGC chief economist. 'Even though contractors do not generally import materials directly, it is clear that domestic producers are raising prices in line with the protection tariffs are providing them.' That's making contractors feel the squeeze at a time when higher interest rates and market uncertainty have cooled demand for some private sector work. Nonresidential construction spending decreased again in June, the most recent month for data, for the sixth time over the past seven months. But July's Producer Price Index may have a more tempered impact, said Paul Giorgio, chief operating officer at Los Angeles-based Eldridge Acre Partners, which recently spun off from AECOM Capital as a separate investment real estate firm. 'Although the PPI rose 0.9% which was higher than 0.2% expectations, the impacts to the consumer and owners were not impactful as the Consumer Price Index only had an insignificant 0.2% increase and only 2.7% increase year-over-year,' Giorgio told Construction Dive. 'These adjustments are in line with normal escalation and not material.' Nevertheless, the cost of key inputs, such as aluminum, steel and copper, continues to rise faster than anticipated, said Michael O'Reilly, vice president at Rider Levett Bucknall, a New York City-based construction consultancy firm. That's causing the construction industry to remain cautious. 'While some relief may come from potential interest rate cuts later this year, much of the industry's optimism hinges on trade policy stabilization," O'Reilly told Construction Dive. 'Without meaningful changes to tariff structures or supply chain conditions, the construction sector may continue to face headwinds through the remainder of 2025.' ABC's Basu cautioned broader inflationary pressures may complicate the Federal Reserve's decision on interest rates in September. 'With prices for final demand goods and services rising at the fastest pace since March 2022, the Federal Reserve will have to consider the prospect of resurgent inflation when deciding whether or not to cut rates at its September meeting,' said Basu. 'The construction industry is in desperate need of lower borrowing costs, and higher rates for longer would continue to weigh on construction spending.' Recommended Reading Construction costs rise as tariff clock ticks
Yahoo
03-07-2025
- Business
- Yahoo
Hiring rate, job openings remain historically low
This story was originally published on Construction Dive. To receive daily news and insights, subscribe to our free daily Construction Dive newsletter. Construction counted 3,000 more open jobs on the last day of May compared with April, according to a Bureau of Labor Statistics report released Tuesday. The industry had 245,000 unfilled positions at the end of the month. That change was minimal compared to the month before, but the current market has been soft in recent months compared to last year, according to Associated Builders and Contractors Chief Economist Anirban Basu. May 2025 had about 35% fewer open positions than the same month in 2024. At the same time, layoffs also remained historically low, economists said, indicating that contractors are keen to hang onto their workers. 'These figures indicate that contractors are becoming more cautious overall, scaling back on growth and expansion plans, but not turning to widespread layoffs,' said Macrina Wilkins, senior research analyst for the Associated General Contractors of America. The reluctance to fire or layoff workers reflects an emphasis on labor retention, Wilkins said. 'Even with fewer openings and hires, firms are holding on to their current workforce, signaling the continued value they place on skilled workers amid persistent labor shortages and uncertainty around project pipelines,' Wilkins said. The year-to-date hiring rate in construction is lower than any other year in the series, which began 25 years ago, said Basu in a release. But low hiring rates, low layoffs and fewer openings don't paint the whole picture. 'Of course, it's unclear how immigration policy uncertainty is affecting these data,' Basu said. 'To the extent that a decline in the hiring of undocumented workers is not reflected, the industry could be significantly weaker than it appears.' Indeed, Immigration Customs and Enforcement raids on jobsites ramped up in May, so the impact on job hiring data is not yet clear. The raids, designed to detain and deport unauthorized workers, not only stall active projects but could have a chilling effect as other jobs pause or assess their workforce risks and needs, experts say. Nonetheless, Basu said contractors remain optimistic in the face of those numbers, with over half of ABC members reporting optimism for staffing in the second half of the year. Recommended Reading Job openings stagnate as labor churn flattens Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
