The price of construction materials and supplies rose for the first time in two months, increasing 0.6 percent in November, according to a producer price index (PPI) report by the U.S. Department of Labor. The overall prices for construction materials remain 2.3 percent below what they were one year ago.
“Lower prices would include more construction projects to move forward, thereby accelerating the recovery of the nonresidential construction sector,” said ABC Chief Economist Anirban Basu. “Unfortunately, rising materials prices are likely to delay the segment’s ultimate recovery.”
“Increasingly, the producer price index for construction industries has come to reflect the growing economic recovery that has been in place since late summer 2009,” Basu said. “Prices are now rising in general, a reflection of higher asset prices across the world, as well as the demand for materials in stimulus-impacted construction segments in the U.S. and in other nations, including China, India and Brazil.”
Nonferrous wire and cable prices were up 1.6 percent last month and are up 12.4 percent from one year ago. Prices for fabricated ferrous wire products are down 12.5 percent on a year-over-year basis. Prices for fabricated structural metal products fell 0.4 percent in November and are down 8.8 percent over the past 12 months.
Softwood lumber prices increased by 1.9 percent last month, but are still down 1.6 percent on an annual basis. Prices for plumbing fixtures and fittings were unchanged last month and are just 0.5 percent higher than they were in November 2008. Prices for asphalt felts and coatings fell 2.5 percent last months and are down 7.4 percent from last year.
“To date, increases in construction materials prices have been benign and have not created the chaos in bidding that occurred earlier in the decade when prices were far more volatile, making it difficult to establish firm bids for lengthy construction projects,” Basu said. “However, many industry stakeholders had been hoping that construction materials prices would continue to decline on a monthly basis. That did not occur in November.”
The jump in energy prices drove the wholesale level higher. The price of natural gas went up 25.5 percent last month, though that price is still 16.3 percent lower on a year-over-year basis. Gasoline prices shot up 14.2 percent last month and are 35.9 percent higher compared to the same month one year ago. Crude energy prices went up 12.2 percent in November and are up 8.4 percent from November 2008.
Overall, the nation’s wholesale prices rose 1.8 percent on a monthly basis and are up 2.4 percent on a year-over-year basis.
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