Construction materials prices fell for the sixth consecutive month, slipping 0.6 percent in March, according to the April 14 producer price index (PPI) report by the U.S. Department of Labor. Construction input prices have fallen 1.9 percent since last year.
“Construction input prices have now slipped into negative territory on a year-over-year basis,” said ABC Chief Economist Anirban Basu. “This is significant because it provides potential relief to profit margins that continue to be squeezed by the weak economy and fierce pricing competition between firms. For the first time in recent memory, bids on many publicly financed projects are coming in below budgetary expectations, a reflection of retreating producer prices, as many firms search for revenues in the hope to rebuild their construction backlogs.”
Prices for fabricated structural metal products continue to drop – down 0.8 percent compared to February – but are still 4.6 percent higher than a year ago. Prices for plumbing fixtures and fittings inched up 0.3 percent in March and are up 1.8 percent from a year ago. Nonferrous wire and cable prices increased for the first time since July 2008, rising 1.1 percent from last month, but remain 23.5 percent below March 2008.
Softwood lumber prices continue to tumble, down 3.5 percent compared to February and down 11.3 percent on a year-over-year basis. Prices for asphalt felts and coatings climbed 4.4 percent from February and are 60.3 percent higher than March 2008. After posting an 8.5 percent decrease compared to February, crude energy prices rose 1.6 percent in March due to a 30 percent increase in crude petroleum prices.
“The implication from today’s data is that the recession remains ongoing and will continue to be reflected in producer prices in the months ahead,” Basu noted. “To many observers, it may be surprising that it required sixteen months of recession to bring construction input prices down on a year-over-year basis. However, this decline in prices is consistent with widely accepted theories of price behavior.”
Overall, the nation’s wholesale prices fell 1.2 percent in March. This is the largest year-over-year decline since 1950.
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