Construction materials prices jump 1.0% in June
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RSS FeedAnother period of rising construction materials prices is now well underway. The 1.0% price rise in June overstates the current inflation trend. About a 5% annual inflation rate is expected from May through December this year with materials rising erratically at about the same pace in 2010.
The June jump in prices was lead by sharp price increases for energy based products and nonferrous metals and smaller price increases for structural steel and concrete. Diesel prices were up 14.6% but have dropped $0.03/gal. since the last price survey. Prices rose about 6% for asphalt products and 8% for nonferrous pipe and tube. Structural steel prices were up 2.5%, ready-mix concrete 0.6% and concrete block 0.5%. Also, softwood lumber prices increased 1.7% in June. Spot market prices suggest another rise in July but falling futures prices suggest the mid-year price spike will be temporary.
Exchange rate trends are again putting upward pressure on the cost of imported materials and equipment. The US $ has depreciated about 8% since March and is expected to continue falling, although more slowly, at least well into next year. This accounts for at least some of the 0.3% rise in construction equipment prices in June in the midst of a deep recession in equipment sales. Note that rental rates for construction equipment fell 1% in June and have dropped 6% relative to new equipment prices over the last year. The weakening dollar has also added $4-5 of the $25 rise in crude oil prices in recent months.
Unaffected by currency and international material demand changes, construction wage rates have stopped rising and contractors’ overhead and profit margin is clearly declining although there are no hard measures to confirm this.
Price trends vary widely by region depending on the level and mix of construction work in each market. Price level and trend information for more than 300 markets is available from RSMeans.
Construction Materials Inflation – June 2009
| Percent Change in… | ||||
| 1 month | 3 months | 12 months | 3 years | |
| Construction Commodities | ||||
| Dimension Stone | -0.8 | 2.8 | 4.7 | 9.9 |
| Cement | -1.1 | -0.4 | 0.5 | 4.9 |
| Asphalt Paving Mixtures and Blocks | 6.4 | 21.2 | -16.6 | 21.0 |
| Construction Sand, Gravel & Crushed Stone | -0.4 | 0.0 | 4.6 | 21.4 |
| Softwood Plywood | -0.7 | -4.7 | -18.9 | -14.1 |
| Hardwood Lumber | -0.6 | -0.7 | -9.9 | -14.9 |
| Softwood Lumber | 1.7 | 1.2 | -18.5 | -29.7 |
| Other Commodities | ||||
| Industrial Natural Gas | 2.2 | -11.5 | -35.5 | -10.2 |
| Plastic Resins & Materials | 0.6 | -1.7 | -13.4 | -4.3 |
| Insulation Materials | 0.0 | -1.4 | 2.1 | -5.7 |
| Iron & Steel Scrap | 1.6 | 6.6 | -62.7 | -21.5 |
| Iron Ore | 0.0 | 0.1 | 5.4 | 12.9 |
| Copper Ores | 5.0 | 36.9 | -38.1 | -32.4 |
| Copper Base Scrap | 5.7 | 47.2 | -31.4 | -17.3 |
| Manufactured Materials | ||||
| Gypsum Products | -0.7 | -3.2 | 2.8 | -22.5 |
| Diesel Fuel | 14.6 | 44.1 | -54.6 | -23.2 |
| Asphalt Roofing | 5.6 | -6.4 | 38.9 | 66.4 |
| Paint | 0.0 | 0.1 | 12.3 | 21.8 |
| Plastic Construction Products | -0.1 | -0.6 | 0.7 | 1.9 |
| Vitreous Plumbing Fixtures | 0.0 | 2.3 | 3.2 | -1.9 |
| Ceramic Tile | 0.6 | -2.1 | 1.6 | 4.2 |
| Flat Glass | 0.4 | -0.3 | 1.2 | 2.4 |
| Fabricated Building Steel | -0.6 | -2.2 | -8.4 | 7.4 |
| Hot rolled bars, plates & structural shapes | 2.5 | -6.2 | -35.1 | -5.7 |
| Extruded Aluminum rod, bar and other shapes | -0.9 | 1.5 | -24.2 | -22.1 |
| Architectural Metalwork | -0.9 | -1.5 | 3.2 | 20.2 |
| Metal Plumbing Fixtures | 0.0 | 0.5 | 0.5 | 12.8 |
| Builders' Hardware | -0.3 | -3.3 | -1.7 | 13.7 |
| Sheet Metal Products | -0.2 | -1.7 | -4.4 | 5.6 |
| Steel Pipe and Tube | -1.9 | -11.1 | -22.7 | 1.2 |
| Nonferrous Pipe and Tube | 8.0 | 23.7 | -21.3 | -26.1 |
| Building Brick | 0.3 | 0.1 | 0.1 | 0.4 |
| Ready Mix Concrete | 0.6 | -0.6 | 2.8 | 10.4 |
| Concrete Block & Brick | 0.5 | 0.1 | 2.0 | 9.6 |
| Prestressed Concrete | -2.6 | -2.6 | -8.0 | -3.6 |
| Precast Concrete Products | -0.2 | 1.5 | 1.1 | 12.8 |
| Concrete Pipe | -0.8 | -1.6 | -0.8 | 15.8 |
| Wood Kitchen Cabinets | 0.1 | -0.6 | 1.9 | 6.6 |
| Millwork (window,door, cabinet) | 0.0 | -0.1 | 1.6 | 4.7 |
| Engineered Wood Products | 0.5 | -0.9 | -4.0 | -13.6 |
| Laminated Plastics | 0.0 | -0.6 | 1.3 | 3.9 |
| Assembled Equipment | ||||
| Hand and Edge tools | 0.1 | 0.5 | 5.6 | 11.0 |
| Power Hand Tools | -3.5 | -3.5 | -2.6 | 1.0 |
| Appliances | -0.3 | 0.0 | 5.3 | 7.0 |
| Furnaces | 0.3 | 0.4 | 2.7 | 12.0 |
| Construction Machinery | 0.3 | -0.4 | 3.9 | 9.0 |
| Construction Machinery Rental (incl. oilfield equip.) |
-1.0 | -0.7 | -1.9 | 4.3 |
| Trucks over 14,000 Ibs. GVW | 0.0 | 0.5 | 4.8 | 12.4 |
| Metal Doors, Sash and Trim | 0.0 | -0.7 | 3.5 | 9.5 |
| Summary | ||||
| Construction Materials (commodity level) | 0.1 | -2.6 | -7.3 | 2.9 |
| Inputs to Construction Industries | 1.0 | 1.2 | -6.2 | 6.4 |
| Inputs to NR Construction | 1.6 | 2.4 | -7.8 | 7.0 |
| Inputs to SF Construction | 0.2 | -0.3 | -2.1 | 6.0 |
| Inputs to MF Construction | 0.5 | 0.4 | -4.8 | 5.5 |
| Inputs to Highway & Street Const. | 3.5 | 5.4 | -10.3 | 10.3 |
| Inputs to Other Heavy Construction (indexes incl. instalation and overhead) |
1.4 | 1.9 | -11.6 | 6.1 |
| New Warehouse Building Construction | -0.5 | -1.5 | 5.2 | 22.1 |
| New School Construction | -2.2 | -2.2 | 7.6 | 18.3 |
| New Office Construction | -0.3 | -0.8 | 6.1 | |
| Production Index: Construction Supplies | -1.0 | -5.2 | -21.5 | -26.7 |
| Retail Sales: Building & Equipment Supplies | -2.3 | -1.6 | -13.0 | -14.7 |
Source: Producer Price Index, Bureau of Labor Statistics,
US Department of Labor, Federal Reserve Board, Census Bureau
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