The Construction Economics Brief, produced by ConstructConnect’s economics team, is a monthly video series whose aim is to provide the latest and most pertinent economic information to construction industry leaders in a concise video format.
Highlights from July 2023 release include:
- The latest data from trackers of construction material prices are pointing to a 4% - 6% year-on-year decline. This decline may, in part, explain a concurrent slowing in the rise of final bid prices for construction work.
- Supply chain performance has improved significantly since the third quarter of 2022. Current measures of supply chain performance reflect a system with greater free capacity, faster performance times, and lower prices. This has helped to build a worrying surge in inventories relative to sales.
As production costs in Asia fall, so are U.S. import prices. This “importing of deflation” will continue to put downward pressure on material prices.
Summary:
As supply chains continue to trend towards pre-COVID conditions, U.S. firms that have been holding excessive inventories will now find themselves at a cost disadvantage relative to those who have more quickly turned back towards the use of a just-in-time (JIT) inventory strategy. The advantage is two-fold, as JIT firms are not only buying materials for less but also avoiding inventory carrying costs.