The recent Producer Price Index (PPI) report from the Bureau of Labor Statistics reveals that prices for final demand rose 0.2% in April. The PPI measures the average change over time in the prices manufacturers and producers receive for the goods they sell. This moderate increase still signals inflationary pressures in the economy, emphasizing the ongoing challenge of managing costs in the current economic climate.
This increase could impact the construction industry, which heavily relies on raw materials and supplies. The red line on the graph, which represents the year-over-year percent change in a composite index of construction materials, has seen an upturn, which could be concerning as it leads the bid price, represented by the blue line, by 12 months; if sustained, this could potentially lead to a re-acceleration in bid prices in 2024, just as building markets are expected to improve following the slowdown in 2023. As we navigate these uncertain times, construction firms must remain vigilant and adapt to evolving market conditions by closely monitoring their costs and adjusting their pricing strategies to stay competitive. Let’s continue to keep an eye on key indicators like the PPI to make informed decisions for our business and clients. Stay tuned for more updates and insights.
