Construction material prices on the rise

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Published: September 20,2010

Tags: construction, economy

WASHINGTON — Construction material costs edged higher in August, according to the Sept. 16 producer price index (PPI) report by the U.S. Labor Department. Prices are 3.6 percent higher than one year ago.

Nonferrous wire and cable prices increased 1.8 percent for the month and are up 8.7 percent compared to Aug. 2009. Prices for plumbing fixtures and fittings were up 0.6 percent in August and up 1.2 percent from the same time last year. Prices for concrete products inched up 0.5 percent for the month, but are down 1.1 percent from Aug. 2009 levels.

Softwood lumber prices slid for a third straight month, down 3.1 percent in August. However, prices are still 6.8 percent higher on a year-over-year basis. Iron and steel prices were down 1.5 percent in August, the third straight monthly price decrease. But, prices are still 18.2 percent higher than they were one year ago. Steel mill product prices were down 3.9 in August, but were still up 17.1 percent from last August. Prepared asphalt, tar roofing and siding prices slipped 0.9 percent in August, but were up 8.6 percent over the last twelve months. Prices for fabricated structural metal products decreased 0.2 percent for the month, but were up 2.8 percent compared to August 2009.

Crude energy prices increased 0.5 percent in August and were up 18.2 percent compared to the same time last year. Crude petroleum prices were up 1.8 percent in August and were 11.8 percent higher than prices one year ago. Overall, the nation’s wholesale prices increased 0.4 percent last month and are 3.1 percent higher from August 2009.

“(The) data support the notion that the nation’s recovery in nonresidential construction is beginning to stall,” said Associated Builders and Contractors (ABC) chief economist Anirban Basu. “For three consecutive months, prices for softwood lumber, iron and steel have been in decline, signaling a growing lack of demand.

“This is consistent with broader data regarding homebuilding activity in the United States, and is consistent with ABC’s construction backlog indicator which indicates that stimulus-induced momentum is beginning to wane.

“The data are also consistent with the notion that inflation remains of little concern in the near-term. Pricing power, including for construction materials, remains weak and there is little reason to believe that prices will rise significantly in the months ahead.”

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