Tag Archive for 'materials prices'

ABC Reports: Construction Materials Prices Remain Tame in April

CEU2“April marks only the second time that price increases have been so suppressed over such a prolonged period.” —ABC Chief Economist Anirban Basu.

PPI_April15Prices for inputs to construction industries fell by 0.1 percent in April, ending a two month streak during which material prices expanded by greater than 0.4 percent. Prices have now fallen in six of the previous eight months and input prices are also down on a year-over-year basis, falling 4 percent since April 2014. This represents the greatest year-over-year decline since October 2009 and year-over-year input prices have now declined for 5 straight months after expanding in each of the previous 60 months. Prices for inputs to nonresidential construction showed a similar decline, falling 0.1 percent for the month and 5.1 percent year-over-year. Crude petroleum prices expanded for only the second time in the previous ten months, growing by 13.1 percent, the largest month-over-month increase since November 2011.

“Construction input prices have now fallen by greater three percent on a yearly-basis in each of the year’s first four months,” said Associated Builders and Contractors Chief Economist Anirban Basu. “This is only the second time that price increases have been so suppressed over such a prolonged period and the first since the middle of the financial crisis in the second and third quarter of 2009. That said, the underlying dynamics of this period of downward trending prices are fundamentally different than those experienced in 2009.

“Two major factors contributed to April’s falling prices,” said Basu. “The strong U.S. dollar, which has expanded by over ten percent against the currencies of the United States’ primary trading partners, has neutralized any underlying inflationary pressures. The other key factor in the subdued price growth is lower energy prices. Consider that prices for crude petroleum, natural gas, and crude energy materials are all over 40 percent lower than in April 2014.

“The U.S. economy continues to disappoint as the expectation had been that the U.S. economy would significantly outperform the balance of the advanced world’s economy this year,” said Basu. “While there is still a chance that that could happen, several sectors of the economy continue to underperform, none worse than retail. Data released yesterday indicate that sales remain flat despite improved weather.

“One of the byproducts of a slow economic start has been a weakening dollar,” said Basu. “Most forecasters had predicted that the U.S. dollar would march toward parity with the Euro. That hasn’t happened and as of this morning, one euro buys $1.14. A weakening dollar is consistent with rising input prices, and should lead to renewed price growth in the near future. For now, however, the impact of previous increases in the value of the dollar are dominating price dynamics.”

Only four of the key materials prices increased in April.

  • Softwood lumber prices expanded 2.6 percent but are 4.7 percent lower than one year ago.
  • Crude petroleum prices expanded 13.1 percent in April but are down 50.4 percent from the same time last year.
  • Crude energy materials prices gained 1.7 percent in April but are 42.2 percent lower year-over-year.
  • Concrete products prices grew 1.3 percent in April and are up 5.1 percent on a yearly basis.

Seven of the 11 key construction inputs did not expand for the month.

  • Fabricated structural metal product prices dropped 0.5 percent lower for the month but have expanded 0.8 percent on a year-over-year basis.
  • Natural gas prices fell 11.8 percent in April and are down 47.9 percent from the same time one year ago.
  • Prices for plumbing fixtures fell 0.1 percent in April, but are up 1.5 percent on a year-over-year basis.
  • Prices for prepared asphalt, tar roofing, and siding fell 2.5 percent for the month and are down 1.9 percent on a year-ago basis.
  • Iron and steel prices fell 2 percent in April and are down 14.5 percent from the same time last year.
  • Steel mill products prices fell 3.4 percent for the month and are 8.7 percent lower than one year ago.
  • Nonferrous wire and cable prices fell 0.3 percent on a monthly basis and shed 2.8 percent on a yearly basis.

To view the previous PPI report, click here

ABC Reports: Construction Materials Prices Expand Again in February

CEU2“February marks the second consecutive month in which construction materials prices expanded briskly.” —ABC Chief Economist Anirban Basu.

PPI_3 14 14Construction materials prices expanded 0.7 percent in February and are up 0.6 percent over the past year, according to the March 14 producer price index release by the Department of Labor. More specifically, nonresidential construction materials prices are up 0.7 percent for the month and are 0.4 percent higher than the same time one year ago.

“February marks the second consecutive month in which construction materials prices expanded briskly,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Construction materials prices experienced a remarkable lack of volatility during the last three quarters of 2013; however, that trend appears to be firmly behind us.”

Overall, the nation’s wholesale goods prices expanded 0.4 percent in February and are up 1.3 percent from February 2013. Crude energy materials prices and natural gas prices led the way, expanding 14.7 percent and 31.5 percent respectively in February. February marked the crude energy segment’s largest monthly growth since January 2004.

“The harsh winter is to blame for the spike in energy segment prices,” said Basu. “In fact, crude petroleum and natural gas both experienced historic price growth in February. We are certain that February’s data reflects the colder-than-normal winter; however, it is difficult to say if increased demand had any part in the month’s price growth. With the frigid weather continuing through early March, it may be awhile before we know this winter’s true impact.

“Another factor has been a tidal wave of economic news from China, much of which suggests that China’s economy is slowing faster than expected,” said Basu. “That could cause prices to dip during future months. In any case, greater price volatility should be anticipated.”

The prices of the following materials increased in February.

Natural gas prices expanded 31.5 percent in February and are 74 percent higher than one year ago.

Crude energy prices grew 14.7 percent in February and are 18.1 percent higher than one year ago.

Concrete products prices grew 0.9 percent in February and are 3.7 percent higher than one year ago.

Steel mill products prices expanded 0.7 percent for the month and are 1.9 percent higher than one year ago.

Prices for prepared asphalt, tar roofing, and siding expanded by 1.4 percent for the month but are down 0.4 percent from one year ago.

Crude petroleum prices grew 10.6 percent in February and are 3.4 percent higher than one year ago.

Prices for plumbing fixtures expanded 1.5 percent for the month and are 3.1 percent higher than one year ago.

Fabricated structural metal product prices are up 0.1 percent and are 0.4 percent higher than one year ago.

Softwood lumber prices gained 0.5 percent and are 1.2 percent higher than one year ago.

Only two key construction inputs did not experience price increases for the month.

Nonferrous wire and cable prices shed 0.4 percent on a monthly basis and are down 4.3 percent from one year ago.

Iron and steel prices fell 0.4 percent in February but are up 4.3 percent from one year ago.

To view the previous PPI report, click HERE

ABC Reports: Construction Materials Prices Increase 1.4 Percent in March

“The increase in input prices during the past year likely has been enough to squeeze profit margins further for contractors.” —ABC Chief Economist Anirban Basu.

Construction materials prices rose 1.4 percent in March, the largest monthly increase since April 2011, according to the U.S. Labor Department’s April 12 producer price index (PPI) report. On a quarterly basis, construction materials prices increased 2.7 percent and are 3.8 percent higher than March 2011. Following a similar pattern, nonresidential construction materials prices moved up 1.6 percent for the month, 2.9 percent for the quarter and 4 percent year over year.

Softwood lumber was one of the materials experiencing a price increase in March, jumping 2.4 percent to reach levels 1.7 percent higher for the quarter and 0.5 percent higher compared to one year ago. Plumbing fixtures and fittings saw price increases of 0.6 percent for the month, 1 percent for the quarter and 3.3 percent year over year. Concrete product prices experienced increases of 0.3 percent for the month, 0.6 percent for the quarter and 2 percent year over year.

In addition, prepared asphalt, tar roofing and siding prices inched up 0.2 percent for the month, but are still down 3.2 percent for the quarter and are flat compared to March 2011. Iron and steel prices also inched up 0.1 percent for the month, and are up 0.4 percent for the quarter and 0.1 percent year over year.

Nonferrous wire and cable prices decreased in March, falling 1.3 percent for the month, 0.5 percent for the quarter and 4 percent year over year. Steel mill prices decreased 0.6 percent for the month, but were up 1.3 percent for the quarter and 0.4 percent during the last 12 months. Prices for fabricated structural metal products slipped 0.2 percent for the month, but were unchanged for the quarter and increased 2.6 percent compared to March 2011.

Crude energy materials prices dropped 9.2 percent in March and are down 7.4 percent for the quarter and 6 percent compared to the same time last year. Crude petroleum prices fell 11.2 percent for the month. Overall, the nation’s wholesale goods prices were flat for the month, 0.5 percent higher for the quarter and 2.8 percent higher than one year ago.

Analysis

“Most construction materials prices behaved well in March,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “The exception in this report was softwood lumber prices, which rose aggressively after a year of minimal increases. But a host of other input prices—including prepared asphalt, iron and steel, and fabricated structural metal products—barely budged.

“However, inputs into nonresidential construction are up 4 percent for the year, which is cause for concern,” Basu said. “Given lingering excess capacity among the contracting community and a general lack of pricing power, the increase in input prices during the past year likely has been enough to squeeze profit margins further for contractors. In addition, recent months have generally seen less vigorous increases in materials prices, which is a reflection of many factors, including a weak construction spending recovery in the United States.

“Perhaps the biggest surprise in this month’s report was the sharp decline in crude energy prices,” Basu said. “Analysts have been predicting for months that oil and other energy prices are set to surge, in part because of geopolitics. But that did not occur in March, creating a source of relief for an industry that uses substantial amounts of diesel fuel to transport materials, in addition to using many other forms of energy throughout the construction process.