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ABC - Construction Materials Prices Increase 0.7 Percent in January

February 20, 2013| www.abc.org

"Oil prices are not expected to fall significantly anytime soon, and they could continue their upward trajectory in the summer months."
—ABC Chief Economist Anirban Basu.

Summary

National construction materials prices increased 0.7 percent in January, with year-over-year prices rising 1.3 percent. Nonresidential construction materials prices were up 0.6 percent for the month and 0.8 percent during the last 12 months.

Several non-metal product prices trended higher in January. Softwood lumber prices jumped 6.7 percent for the month and are now 24.8 percent higher than one year ago. Prices for prepared asphalt, tar roofing and siding increased 0.9 percent for the month and are 0.7 percent higher than last January. Concrete product prices increased 0.3 percent compared to December and are 2.3 percent higher than one year ago.

Metal material prices varied in January. Nonferrous wire and cable prices edged 0.2 percent higher for the month and are up 0.2 percent year over year. Prices for plumbing fixtures and fittings were flat for the month, but are 1.3 percent higher compared to the same time last year. Iron and steel prices decreased 0.2 percent in January and are 10.1 percent lower than the same time last year. Steel mill prices slipped 0.1 percent for the month and are 8.3 percent lower than one year ago. Prices for fabricated structural metal products were down 0.4 percent in January, but are up 0.4 percent year over year.

Crude energy materials prices increased 2.3 percent in January, driven by an 8.1 percent increase in crude petroleum prices. Year over year, crude energy materials prices are down 1.5 percent. Overall, the nation’s wholesale goods prices increased 0.2 percent in January and are 1.4 percent higher than the same time last year.

Analysis

“We have been anticipating an increase in construction materials price volatility for several months,” said Associated Builders and Contractors (ABC) Chief Economist Anirban Basu. “Today’s data indicates that ABC’s prediction of increased volatility in 2013 after a period of unusually stable prices in 2012 is proving to be correct.

“Some of the materials experiencing instability relate more closely to residential construction,” Basu said. “Because of the severe downturn in residential activity, a certain level of productive capacity was removed from the marketplace. With demand for softwood lumber and other materials associated with residential construction now rising, prices also are moving higher. Moreover, increased exports to China have contributed to the recent surge in softwood lumber prices.

“The other major impetus for volatility in January was petroleum,” Basu said. “As many American consumers can attest, oil and gasoline prices have been rising recently. With the Indian and Chinese economies expected to expand more than 6 percent and 8 percent, respectively, and with part of the of the industrial world stabilizing, oil prices are not expected to fall significantly anytime soon, and they could continue their upward trajectory in the summer months.

“The bottom line is materials prices likely will continue to be more volatile this year,” Basu said.

To view the previous PPI report, click here.

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