Construction Materials Prices Flat in July Despite 4% Crude Inflation

Source: ASSOCIATED BUILDERS AND CONTRACTORS INC. 
Created: August 14, 2013

Construction materials prices remained stable from June to July but are up 2 percent compared to July 2012, according to the latest Producer Price Index release by the U.S. Labor Department. Nonresidential construction materials prices were down 0.1 percent for the month and are 1.8 percent higher than one year ago.

Crude energy prices climbed 4 percent in July and crude petroleum prices jumped 10.6 percent. Year over year, crude energy prices are up 21.6 percent.

Prices for plumbing fixtures and fittings increased 2.1 percent from June and are up 3.1 percent annually.

Prices for prepared asphalt, tar roofing and siding rose 2 percent for the month and are 4.7 percent higher than the same time last year.

Iron and steel prices increased 1.7 percent in July, but remain 2.8 percent lower on an annual basis.

Prices for steel mill products edged 0.4 percent higher in July, but remain 6.1 percent lower than one year ago.

Prices for concrete products were 0.5 percent higher for the month and are up 3.3 percent compared to last year.

Key construction inputs that did not experience price increases for the month include fabricated structural metal products, which were unchanged and have been flat on a year-over-year basis.

Softwood lumber prices slipped for the third straight month, down 0.5 percent in July, but are still 9.9 percent higher than one year ago.

Nonferrous wire and cable prices fell 1.1 percent for the month and are down 3.9 percent from July 2012.

Overall, the nation’s wholesale goods prices were flat in July and are 2.1 percent higher than the same time last year.

"According to today’s Producer Price Index report, nonresidential construction materials remained well behaved, with aggregate price levels falling 0.1 percent in July and inputs to nonresidential construction increasing less than 2 percent during the past year" said ABC Chief Economist Anirban Basu. "Input price inflation is rarely so well contained.

"However, looking beyond the headline number reveals a different story. In July, many nonresidential materials prices expanded, some of them significantly. For instance, the largest monthly increase occurred in crude energy, with prices rising 4 percent. Other categories registering monthly increases in excess of 1 percent were plumbing fixtures and fittings, prepared asphalt, tar roofing and siding, and iron and steel. For contractors, the implication is that not all materials prices are well behaved.

“Prices fell in certain categories, including softwood lumber and nonferrous wire and cable. Those declines help explain the flat overall PPI number for the month, but do not change the fact that materials prices remain more volatile than they might appear at first glance.”