Construction materials prices continued their downward slide in February, falling 0.6 percent, according to the March 17 producer price index released by the U.S. Department of Labor. Despite the drop, prices are up 0.5 percent compared to last year.
Fabricated structural metal products prices have declined during each of the past four months and were down 2 percent in February, but are still 6.7 percent higher than a year ago. Plumbing fixtures and fittings prices fell 0.6 percent from January 2009 and are up 1.5 percent from February 2008. Prices for fabricated ferrous wires products continue to decline and were down 1.5 percent in February, however even with recent downward pressure on these prices, they are still up 15.3 percent compared to a year ago. Softwood lumber pries decreased for a sixth consecutive month, down 0.6 percent in February and 7.6 percent from a year ago. Asphalt felts and coatings prices went up 6.2 percent in February after declining during the previous three months.
“Because of the Federal Reserve’s rapid expansion of money supply in recent months and the federal government’s massive prospective outlays, there are many economic observers who have now become fixated on the specter of future inflations,” said ABC Chief Economist, Anirban Basu. “However, deflationary pressures continue to dominate and ABC members have many other things to worry about before a resumption of inflationary pressures and higher materials prices. Construction volumes continue to decline around the world, with the implication being that demand for construction materials will remain soft.”
Crude energy prices decreased 8.5 percent in February after dropping 8.1 percent in January. Natural gas prices were down nearly 18 percent. Crude petroleum prices, however, were up 2.5 percent and coal was up 2.2 percent. Overall, the nation’s wholesale prices rose a modest 0.1 percent.
“Given the ongoing spread of economic weakness globally, ABC members should expect deflationary pressures to remain in force for months to come,” said Basu. “There are exceptions to this, of course, including oil prices, which have been trending higher in recent weeks. This has little to do with growing demand and everything to do with promises of supply cuts by major oil producers.
“With the presence of declining construction input prices, this has become an advantageous moment for the federal government to be investing in infrastructure,” Basu continued. “However, the advantages of falling construction materials prices may be more than offset by potential shifts in the public policies that shape the character and functioning of America’s labor markets.”
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