Construction material prices fell 1.1 percent in November, according to Associated Builders and Contractors, Inc., (ABC).  In their recent Construction Economic Update, ABC Chief Economist Anirban Basu reported that, “Investors may be reducing their positions in economically sensitive commodities in response to fears regarding America’s fiscal cliff.”

According to the producer price index reported by the U.S. Department of Labor, the decline was the largest monthly decrease since February 2009.   The article also stated that:  “Nonresidential construction materials prices dipped 1.3 percent for the month, but are up 0.6 percent on a year-over-year basis.”

In Basu’s analysis he says, “Given elevated levels of geopolitical uncertainty, contractors can expect greater volatility in materials prices in 2013 compared to 2012.  With construction materials prices up 1 percent in the past year, it is unlikely prices will remain as sustained in 2013 given a host of political and economic considerations. Accordingly, contractors will need to be more careful in their contractual dealings next year over the concern of unexpected price hikes.”

You can find the ABC Construction Update and other important information for our industry at: http://www.abc.org/en-us/abc.aspx.