Although the cost of construction materials prices rose only 0.1 percent in February, materials prices are still 2.8 percent higher than one year ago, according to a March 17 producer price index (PPI) report by the U.S. Department of Labor (DOL).
“Today’s PPI report is consistent with what has been observed in recent months – construction materials prices are on the rise,” said ABC Chief Economist Anirban Basu. “This is unfortunate because the nation’s nonresidential construction industry remains mired in its slump – a slump associated with declining construction spending and backlog.”
Softwood lumber experienced one of the largest increases in February, up 7.5 percent monthly and 17.7 percent year over year. Iron and steel also continued to rise, seeing a 3.6 percent increase in February and a 13.5 percent increase over February 2009. Fabricated structural and metal products saw a price increase of 0.9 percent on a monthly basis, but they are still down 4.8 percent year over year.
In contrast, prepared asphalt, tar roofing and siding prices saw a decline of 0.5 percent in February, but are still 2.6 percent higher compared to one year ago. Prices for plumbing fixtures and fittings also decreased slightly for the month, dropping 0.6 percent, while still remaining 1.4 percent above February 2009 prices and concrete prices still hovered 0.4 percent higher than one year ago despite a decrease of 2.7 percent in February. The largest monthly decline in prices belonged to nonferrous wire and cable, which saw a decrease of 3.1 percent in February; however, prices are still 2.2 percent higher than February 2009.
“Since construction materials are globally traded inputs, and with the Chinese and other countries around the world back in growth mode, upward pressure on materials prices is becoming increasingly evident,” said Basu.
“However, it is unlikely that contractors will suffer from the volatility in materials prices witnessed during the middle part of the prior decade,” Basu noted. “With the U.S. dollar remaining stable and with much of the world, with the exception of Asia, still expanding slowly, spikes in construction materials prices have yet to occur.”
Overall, the nation’s wholesale prices fell 0.6 percent – the largest drop in seven months – although prices are still 4.4 percent higher on a year-over-year basis. The DOL attributed the decrease to a 2.9 percent drop in energy costs.
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