The 2009 Drop in Construction Materials Prices is Over
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RSS FeedConstruction materials prices fell 7.5% from September 2008 to August 2009. The decline is now over with the price index approximately steady for the last three months. Little change is expected in the next six months although a slight upward trend is likely. Both the overall economy and the construction market are operating well below potential. The unused manufacturing resources will exert a significant downward pressure on materials prices. Also, material inventory is still very high although it has declined substantially since earlier in 2009.
Nonetheless, a slight upward trend in prices is expected through the winter because of expected international economic developments. Asian economies are recovering faster than in the US. Chinese economic growth has already returned to about an 8% annual rate. This rising demand for construction commodities and manufactured materials will pressure US construction materials prices up in spite of the slack US economy. The expected continuing depreciation of the US dollar also contributes to rising prices for imported commodities and materials. This will very significant for metals and energy-based products.
Beyond next winter, both the US economy and the construction market will be expanding, although initially at a modest pace. Canadian and European economies will also be expanding. This added demand for materials adds inflation pressure to materials prices. The inflation pace for construction materials will pick up quickly to well above the inflation rate for the overall economy. Materials prices are expected to expand 5-6% in 2010 and probably slightly more in 2011. Demand will strength in 2011 but suppliers will have had time by them to increase production.
Construction Materials Inflation – August 2009 | ||||
| Percent Change versus... | ||||
| 3 years ago |
year ago |
3 months ago |
previous month |
|
| Construction Commodities | ||||
| Dimension Stone | 10.2 | 4.9 | 0.3 | 1.2 |
| Cement | 3.8 | -0.3 | -1.0 | 0.3 |
| Asphalt Paving Mixtures and Blocks | 8.4 | -41.8 | 8.9 | 2.1 |
| Construction Sand, Gravel & Crushed Stone | 19.2 | 3.2 | -0.3 | -0.4 |
| Softwood Plywood | -2.8 | -11.7 | 4.4 | 1.5 |
| Hardwood Lumber | -14.1 | -7.4 | 1.2 | 1.0 |
| Softwood Lumber | -16.6 | -9.0 | 10.9 | 2.2 |
| Other Commodities | ||||
| Industrial Natural Gas | -13.9 | -34.6 | 0.6 | -1.3 |
| Plastic Resins & Materials | -3.1 | -19.6 | 3.5 | -1.2 |
| Insulation Materials | -6.3 | -0.9 | -1.5 | -1.0 |
| Iron & Steel Scrap | 20.9 | -49.8 | 38.5 | 13.5 |
| Iron Ore | 3.9 | -3.3 | -8.3 | 0.0 |
| Copper Ores | -29.3 | -36.0 | 14.3 | 3.9 |
| Copper Base Scrap | -0.6 | -19.9 | 25.7 | 16.6 |
| Manufactured Materials | ||||
| Gypsum Products | -26.6 | -3.7 | -2.4 | -0.8 |
| Diesel Fuel | -20.1 | -41.5 | 21.6 | 16.7 |
| Asphalt Roofing | 52.7 | 7.9 | -1.3 | -5.0 |
| Paint | 22.1 | 5.1 | 0.0 | 0.0 |
| Plastic Construction Products | 0.7 | -2.3 | -0.4 | -0.1 |
| Vitreous Plumbing Fixtures | -2.0 | 2.5 | 0.0 | 0.0 |
| Ceramic Tile | 0.9 | -1.7 | -1.7 | -0.7 |
| Flat Glass | -0.4 | -4.0 | -2.0 | -1.2 |
| Fabricated Building Steel | 3.6 | -11.4 | -2.0 | 0.6 |
| Hot rolled bars, plates & structural shapes | -1.9 | -36.4 | 9.2 | 4.7 |
| Extruded Aluminum rod, bar and other shapes | -16.2 | -22.2 | 4.8 | 1.0 |
| Architectural Metalwork | 18.5 | -2.4 | -1.2 | -0.2 |
| Metal Plumbing Fixtures | 9.3 | -0.3 | -0.1 | -0.1 |
| Builders' Hardware | 11.9 | -4.8 | 1.1 | 0.8 |
| Sheet Metal Products | 1.8 | -7.6 | -1.1 | -0.8 |
| Steel Pipe and Tube | 1.6 | -25.8 | -0.9 | 2.8 |
| Nonferrous Pipe and Tube | -4.5 | -13.2 | 20.7 | 10.6 |
| Building Brick | 0.3 | -0.5 | 0.3 | 0.3 |
| Ready Mix Concrete | 7.1 | 1.9 | -0.8 | -0.9 |
| Concrete Block & Brick | 8.2 | 1.7 | 0.8 | 0.0 |
| Prestressed Concrete | -6.8 | -14.3 | -6.1 | -0.6 |
| Precast Concrete Products | 11.8 | 0.9 | -0.3 | -0.1 |
| Concrete Pipe | 11.5 | -3.0 | -2.3 | -1.4 |
| Wood Kitchen Cabinets | 6.1 | 2.0 | 0.1 | 0.0 |
| Millwork (window,door, cabinet) | 4.1 | 1.6 | -0.1 | 0.0 |
| Engineered Wood Products | -12.8 | -5.6 | 0.5 | 0.4 |
| Laminated Plastics | 4.9 | -1.6 | 0.1 | 0.0 |
| Assembled Equipment | ||||
| Hand and Edge tools | 10.9 | 2.8 | 0.0 | -0.1 |
| Power Hand Tools | 4.0 | -0.1 | -0.5 | 1.7 |
| Appliances | 5.9 | 3.5 | -0.7 | 0.1 |
| Furnaces | 11.6 | 1.1 | -0.2 | 0.1 |
| Construction Machinery | 8.7 | 2.6 | -0.2 | -0.6 |
| Construction Machinery Rental (incl. oilfield equip.) | 0.6 | -1.1 | -1.6 | -1.7 |
| Trucks over 14,000 Ibs. GVW | 13.2 | 5.0 | 1.0 | 0.5 |
| Metal Doors, Sash and Trim | 6.8 | -1.9 | -1.8 | 0.0 |
| Summary | ||||
| Construction Materials (commodity level) | 3.0 | -9.0 | 1.3 | 1.1 |
| Inputs to Construction Industries | 5.7 | -7.5 | 1.6 | 1.1 |
| Inputs to NR Construction | 7.1 | -8.9 | 3.1 | 2.2 |
| Inputs to SF Construction | 5.8 | -3.8 | 0.9 | 0.8 |
| Inputs to MF Construction | 4.8 | -5.7 | 0.9 | 0.8 |
| Inputs to Highway & Street Const. | 8.0 | -12.8 | 3.1 | 1.4 |
| Inputs to Other Heavy Construction (indexes incl. instalation and overhead) |
4.9 | -12.1 | 1.9 | 1.3 |
| New Warehouse Building Construction | 19.7 | 1.4 | -2.4 | 0.1 |
| New School Construction | 15.4 | 7.2 | -2.7 | -0.5 |
| New Office Construction | 3.1 | -2.1 | 0.2 | |
| Production Index: Construction Supplies | -26.0 | -21.0 | -0.6 | -0.1 |
| Retail Sales: Building & Equipment Supplies | -16.9 | -13.3 | -3.6 | -1.2 |
Source: Producer Price Index, Bureau of Labor Statistics, | ||||
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