Construction materials prices rose in September


The nation’s construction materials prices rose 0.9 percent in September, according to the producer price index report by the U.S. Labor Department. Materials prices are up 1.1 percent from the previous quarter. Year over year, construction materials prices are up 1.7 percent. Nonresidential construction materials prices were up 1.2 percent for the month, up 1.3 percent for the quarter, and 1.6 percent higher than the same time last year.

“This month represented a second consecutive month of construction materials price increases,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Based purely on macroeconomic data, it would have been logical for materials prices to fall given the recent news of ongoing global economic deceleration, including major Asian and Latin American economies.

“We may be in a period during which materials prices are set to increase, despite a lack of robust economic growth,” said Basu. “Under various scenarios, financial markets could exhibit significant volatility going forward, causing some investors to place additional funds into hard assets like steel, oil, and copper. This would not be supportive of a construction spending recovery as projects become more expensive.”

Most metallic construction materials prices rose in September. Steel mill product prices increased 1 percent for the month, but are 4.3 percent lower from the second quarter, and 7.1 percent lower from one year ago. Prices for fabricated structural metal products increased 0.6 percent in September, but are 0.7 percent lower from three months ago, and 0.4 percent higher compared to the same time last year. Iron and steel prices rose 0.5 percent for the month, but are down 2.9 percent for the quarter, and are 8.9 percent lower from September 2011. Prices for plumbing fixtures and fittings increased 0.5 percent for the month, are up 0.7 percent for the quarter, and are 1.6 percent higher compared to one year ago. Nonferrous wire and cable prices fell 1.3 percent for the month, are down 0.3 percent over the past three months, and are 6.9 percent lower than the same time last year.

Prices for nonmetallic construction materials also trended higher last month. Softwood lumber prices jumped 2.6 percent in September, are 2.2 percent higher from three months ago, and 11.7 percent higher compared to the same time last year. Prices for prepared asphalt, tar roofing, and siding increased 0.3 percent for the month, were up 3.8 percent for the quarter, but remained 3.9 percent lower from one year ago. Concrete product prices inched up 0.1 percent in September, edged up 0.9 percent for the quarter, and were up 2.1 percent from September 2011.

Crude energy materials prices increased 4.4 percent in September, driven primarily by an 11.4 percent gain in crude petroleum prices. Over the quarter, crude energy materials prices rose 15.2 percent. However, crude energy materials prices are down 6.1 percent from the same time last year. Overall, the nation’s wholesale goods prices rose 1.1 percent in September, were up 3.1 percent for the quarter, and are 2.2 percent higher from one year ago.


“The trials and tribulations of the European economy are well known, and U.S. and Japanese growth remain highly constrained,” said ABC’s chief economist Anirban Basu. “Still, some of the increases in materials prices were quite large last month, including in categories such as fabricated structural metal products and steel mill products. Over the past year, materials prices are up just 1.6 percent, but roughly three quarters of that is explained by the last month alone.

“There is precedent for this type of counterintuitive response,” said Basu. “Many construction industry participants will remember early 2008, a period during which the global economy was decelerating and materials prices were surging. There are likely some parallels between that period and our current economic situation.

“With investors becoming increasingly jittery about events in Europe, the Middle East, and the United States, more money may be pouring into the commodity segments and less into stocks and bonds,” Basu said. “Policy announcements, including the latest word from the Federal Reserve on a third quantitative easing proposal, may accelerate the flow of money into commodities, resulting in higher prices in the absence of expanding global demand.”  Read More.



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