Construction Materials Prices Slip 0.1 Percent in December


National construction materials prices barely declined in December—dipping 0.1 percent—and are just 1.3 percent higher than a year ago. Average annual prices in 2012 were 1.9 percent higher than 2011 prices, a reflection of unusual price stability during the course of the year. Nonresidential construction prices were down 0.3 percent in December and are up 0.8 percent year over year. Annual prices were up 1.7 percent compared to the previous year.

“While 2012 was chaotic for a number of reasons, including uncertainty regarding the fiscal cliff, European sovereign debt and a variety of geopolitical issues, materials prices were unusually well behaved,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Monthly changes tended to be gradual and amounted to a year in which materials prices were up less than 2 percent. One of the key aspects of 2012 was a softer Chinese economy, which served to dampen growth in demand for construction materials worldwide.

Despite the overall decline, prices of numerous construction materials rose last month (e.g., metal products costs generally trended higher in December). Iron and steel prices increased 0.8 percent for the month, but were 8.4 percent lower than the same time last year. Steel mill product prices were up 0.9 percent in December, but were down 7.9 percent on a year-over-year basis. Prices for nonferrous wire and cable increased 0.6 percent, but were 1.7 percent lower compared to December 2011. Prices for fabricated structural metal products inched up 0.3 percent for the month and were 0.6 percent higher than the same time last year. Prices for plumbing fixtures and fittings were up 0.3 percent compared to November and up 1.7 percent compared to December 2011.

Softwood lumber prices surged 2.1 percent in December and are up 17.3 percent relative to a year ago. Prices for concrete products increased 0.6 percent compared to the previous month and are up 2.4 percent compared to the same time last year. Prices for prepared asphalt, tar roofing and siding slipped 1.1 percent in December and are down 0.6 percent on a year-over-year basis.

Crude energy materials prices jumped 7.2 percent in December, driven by a 9.4 percent increase in crude petroleum prices. Year over year, crude energy materials prices are down 4.5 percent.

Overall, the nation’s wholesale goods prices fell 0.2 percent in December, but are 1.3 percent higher than the same time last year. Annually, 2012 wholesale prices were 1.9 percent higher than 2011 prices.


“This year is shaping up to be a bit different,” ABC’s Chief Economist Anirban Basu said. “China appears positioned to expand more than 8 percent, the Japanese government recently introduced a stimulus package in excess of $200 billion and news from much of Europe has been a bit better of late.

“The upshot is that materials prices may be positioned to rise a bit more rapidly this year, though as of now there is little reason to believe we will experience the types of price spikes that occurred prior to the Great Recession,” said Basu. “December data provide us with a sense of what the near-term future might look like, with many categories such as steel mill products and crude petroleum rising on a monthly basis.

“However, if the United States is unable to appropriately deal with the debt ceiling, continuing resolution and other fiscal issues during the next several months, the corresponding downshift in national economic activity could result in falling materials prices during the first half of 2013,” Basu said. “There likely would be greater volatility in prices from month to month under such a scenario.” Read More.