Construction input prices dipped 1.4 percent during the final month of 2014 and are down nearly 1 percent on a year-over-year basis, according to the January 15 producer price index release from the U.S. Department of Labor. Inputs to nonresidential construction fell even farther, down 1.7 percent for the month and 1.9 percent year over year. December's report marks the sharpest decline in input prices since late 2008 during the global financial crisis and the fifth consecutive month construction materials prices have failed to rise.
"Without question, financial markets have been unnerved by the recent declines in oil, copper and other commodity prices, although that jitteriness does not necessarily imply a serious economic problem in America," said Associated Builders and Contractors Chief Economist Anirban Basu. "The fact is the U.S. economy has performed handsomely over the past nine months, according to most metrics, and conventional wisdom suggests that it can continue to expand at or above trend rates of growth despite economic weakening in Europe, China and elsewhere. This is further evidenced by the World Bank's recent downgrade of its forecasts for global growth in 2015 and 2016, while it upgraded its outlook for the United States.
"Overall, the view that U.S. domestic demand for construction services and most other services continues to expand is consistent with the fact that some domestically produced and consumed materials actually registered price increases last month," said Basu. "Note that concrete prices are up by 5 percent on a year-over-year basis while natural gas prices are up by 10 percent."
The following materials prices increased in December:
- Prices for plumbing fixtures expanded 0.1 percent in December and are up 3.1 percent on a year-over-year basis.
- Concrete products prices expanded 0.7 percent in December and are up 5 percent on a yearly basis.
- Natural gas prices expanded 19.7 percent in December and are 10 percent higher than one year ago.
- Fabricated structural metal product prices grew 0.3 for the month and have expanded 1.5 percent on a year-over-year basis.
Seven of the 11 key construction inputs did not experience price increases for the month.
- Iron and steel prices fell 1 percent in December and are down 3.9 percent from the same time last year.
- Nonferrous wire and cable prices fell 1.6 percent on a monthly basis and 1.5 percent on a yearly basis.
- Prices for prepared asphalt, tar roofing, and siding fell 1 percent for the month but are up 1.9 percent on a year-ago basis.
- Steel mill products prices fell 1.3 percent for the month but are 0.4 percent higher than one year ago.
- Softwood lumber prices fell 1.3 percent in December but are 0.3 percent higher than one year ago.
- Crude petroleum prices fell 18.9 percent in December and are down 37.1 percent from the same time last year.
- Crude energy materials prices fell 4.7 percent in December but are 19.6 percent lower year-over-year.
View the November PPI report.