Has Materials Price Stability Come to an End

Construction materials prices expanded 0.6 percent in January and are up 1.5 percent year over year, according to the February 19 producer price index released by the Department of Labor. More specifically, nonresidential construction materials prices are up 0.5 percent for the month and are 1 percent higher than the same time one year ago.

"After a period of unusual stability, materials prices expanded more briskly in January," said Associated Builders and Contractors Chief Economist Anirban Basu. "While the year-over-year increase in nonresidential construction prices is benign, January raises the question of whether that period of stability is coming to an end.

"While economists work to determine if short-term atmospheric phenomenon or longer-term economic factors were the driving factors behind the volatility, it appears that weather played a dominate role in shaping price patterns in January," Basu said. "Although it is true that the global economy has been accelerating recently and the nonresidential construction sector is becoming more active in the United States, increased demand for materials likely played a relatively minor role in January's price behavior."

"Another factor behind January's aggregate price increase could be the impact of the weather on energy - natural gas prices surged in January and crude energy rose more than 1 percent during the last month," Basu said.

Overall, the nation's wholesale goods prices expanded 0.4 percent in January and are up 0.9 percent year over year.

The following materials prices increased in January:

  • Natural gas prices expanded 14.5 percent in January and are 27.7 percent higher than one year ago.
  • Iron and steel prices expanded 1.9 percent in January and are up 3.9 percent from the same time last year.
  • Nonferrous wire and cable prices gained 1.7 percent on a monthly basis but are down 3.6 percent from January 2013.
  • Steel mill products prices expanded 1.2 percent for the month and are 0.5 percent higher than one year ago.
  • Crude energy prices grew 1.1 percent in January and are 3.8 percent higher year over year.
  • Concrete products prices grew 0.6 percent in January and are up 2.8 percent on a yearly basis.

A number of key construction inputs did not experience price increases for the month.

  • Crude petroleum prices fell 7.6 percent in January and are down 4 percent from January 2013.
  • Softwood lumber prices fell 0.6 percent but are 2.8 percent higher than one year ago.
  • Prices for prepared asphalt, tar roofing, and siding declined 0.4 percent for the month and are down 0.8 percent on a yearly basis.
  • Fabricated structural metal product prices are down 0.4 percent but have risen 0.1 percent on a year-over-year basis.
  • Prices for plumbing fixtures remained flat for the month and are up 1.7 percent on a year-over-year basis.

View the December 2013 Producer Price Index report.

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