Construction Materials Prices rise 0.5% in September
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RSS FeedThe construction materials price index rose 0.5% in September after no change in August. September prices were 12.7% above a year earlier. The major increases in September were gains of over 6% for asphalt and asphalt roofing, 1.2% for ready-mix, about 1% for energy based products, about 0.5% for metal products and marginal rises for wood products. The major declines were 9.2% for nonferrous pipe and tube, 4.4% for structural steel and 1.7% for gypsum products.
The worldwide surge in commodity prices is over and is now partially reversing. This is due to the credit freeze that caused an abrupt drop in capital spending worldwide. Plunging fuel prices are also quickly reversing the recent rapid rise in freight cost. The September increases for some construction materials were the end of the price surge. Prices for processed and manufactured products continued to rise for several weeks after raw commodity prices began to fall.
Generally commodity prices will be weakening into the winter as surplus materials are sold at distress prices and delivery and processing costs decline with fuel costs. Year to year, construction materials prices will increase 15% in 2008 and 5% in 2009. Overlapping the two years, prices will be declining in late 2008 and early 2009. This will be the combination of double-digit prices falls for some imported commodities priced in world markets and near 0.0% change in processed and manufactured materials priced in domestic US markets.
This is exactly what happened in 2004 commodity price surge. Overall, construction materials costs were steady for a year before they began to rise again late in 2005.
Construction Materials Inflation – September 2008
| Percent Change in… | ||||
| 1 month | 3 months | 12 months | 3 years | |
| Construction Commodities | ||||
| Dimension Stone | 0.0 | 1.6 | 4.8 | 7.5 |
| Cement | -0.8 | -0.9 | -1.6 | 15.2 |
| Asphalt Paving Mixtures and Blocks | 6.2 | 74.0 | 129.8 | 244.5 |
| Construction Sand, Gravel & Crushed Stone | 0.2 | 1.7 | 6.9 | 26.6 |
| Softwood Plywood | 3.5 | 0.7 | -2.8 | -20.7 |
| Hardwood Lumber | -0.7 | -1.9 | -5.0 | -6.9 |
| Softwood Lumber | -0.5 | -1.1 | -4.0 | -19.6 |
| Other Commodities | ||||
| Industrial Natural Gas | -6.7 | -4.5 | 27.4 | 2.1 |
| Plastic Resins & Materials | -3.1 | 8.1 | 19.2 | 25.4 |
| Insulation Materials | -0.2 | 0.9 | -1.8 | 0.4 |
| Iron & Steel Scrap | -22.4 | -21.1 | 47.9 | 88.3 |
| Iron Ore | 0.0 | 0.0 | 12.0 | 22.4 |
| Copper Ores | -10.4 | -3.6 | -5.2 | 90.6 |
| Copper Base Scrap | -9.4 | -12.7 | 4.2 | 93.8 |
| Manufactured Materials | ||||
| Gypsum Products | -1.7 | 3.8 | 1.7 | -10.3 |
| Diesel Fuel | -1.4 | -14.1 | 39.0 | 61.0 |
| Asphalt Roofing | 6.1 | 32.5 | 47.5 | 56.9 |
| Paint | 1.0 | 8.1 | 12.2 | 27.5 |
| Plastic Construction Products | 0.8 | 4.4 | 6.8 | 23.5 |
| Vitreous Plumbing Fixtures | 0.0 | 1.7 | -6.4 | -2.8 |
| Ceramic Tile | 0.0 | 1.1 | 1.7 | 4.7 |
| Flat Glass | -1.4 | 1.8 | 1.8 | 4.7 |
| Fabricated Building Steel | -0.1 | 3.1 | 13.9 | 24.8 |
| Hot rolled bars, plates & structural shapes | -4.4 | 8.6 | 37.7 | 64.6 |
| Extruded Aluminum rod, bar and other shapes | -5.8 | -3.8 | 3.7 | 16.4 |
| Architectural Metalwork | 6.5 | 14.8 | 24.6 | 34.8 |
| Metal Plumbing Fixtures | 0.0 | 2.0 | 3.3 | 16.2 |
| Builders' Hardware | -0.4 | 7.0 | 12.5 | 25.3 |
| Sheet Metal Products | 0.8 | 4.5 | 10.7 | 18.9 |
| Steel Pipe and Tube | -1.0 | 11.4 | 36.8 | 46.0 |
| Nonferrous Pipe and Tube | -9.2 | -15.2 | -7.0 | 69.0 |
| Building Brick | -0.1 | -0.1 | -0.6 | 9.9 |
| Ready Mix Concrete | 1.2 | 1.3 | 3.3 | 17.9 |
| Concrete Block & Brick | 0.8 | 1.9 | 3.8 | 15.6 |
| Prestressed Concrete | -1.0 | 3.3 | 4.9 | 25.1 |
| Precast Concrete Products | -0.1 | 0.4 | 4.5 | 16.0 |
| Concrete Pipe | -0.1 | 3.3 | 12.5 | 19.3 |
| Wood Kitchen Cabinets | 0.3 | 0.1 | 2.3 | 6.7 |
| Millwork (window, door, cabinet) | 0.3 | 0.0 | 1.9 | 6.0 |
| Engineered Wood Products | 0.0 | 2.5 | 1.9 | -8.4 |
| Laminated Plastics | -1.4 | 1.3 | 5.4 | 7.9 |
| Assembled Equipment | ||||
| Hand and Edge tools | 0.6 | 3.2 | 6.1 | 10.2 |
| Power Hand Tools | 0.4 | 0.9 | 2.4 | 3.3 |
| Appliances | 0.5 | 1.6 | 2.4 | 4.4 |
| Furnaces | -0.7 | 1.2 | 2.0 | 10.6 |
| Construction Machinery | 0.5 | 1.9 | 3.9 | 10.0 |
| Construction Machinery Rental (incl. oilfield equip.) |
-0.9 | -2.3 | -1.7 | 7.3 |
| Trucks over 14,000 Ibs. GVW | -0.3 | 0.4 | 2.0 | 10.9 |
| Metal Doors, Sash and Trim | -0.3 | 4.1 | 6.1 | 12.6 |
| Summary | ||||
| Construction Materials (commodity level) | -0.2 | 5.6 | 12.7 | 22.4 |
| Inputs to Construction Industries | 0.5 | 4.4 | 13.1 | 23.2 |
| Inputs to NR Construction | 0.6 | 5.6 | 16.6 | 27.9 |
| Inputs to SF Construction | 0.6 | 4.4 | 9.1 | 17.7 |
| Inputs to MF Construction | 0.5 | 3.3 | 9.6 | 19.5 |
| Inputs to Highway & Street Const. | 0.7 | 6.3 | 22.2 | 37.1 |
| Inputs to Other Heavy Construction (indexes incl. installation and overhead) |
0.2 | 3.9 | 16.9 | 29.7 |
| New Warehouse Building Construction | -0.2 | 1.6 | 4.2 | 17.1 |
| New School Construction | 7.3 | 8.2 | ||
| New Office Construction | 0.1 | 1.0 | 3.7 | |
| Production Index: Construction Supplies | 0.4 | 0.6 | -5.1 | -3.5 |
| Retail Sales: Building & Equipment Supplies | -2.2 | 2.2 | -2.4 | 0.5 |
Source: Producer Price Index, Bureau of Labor Statistics,
US Department of Labor, Federal Reserve Board, Census Bureau
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