Prices for inputs to construction industries expanded 0.2% in June after increasing 1.1% in May. Year-over-year prices were down 2.2% in June and prices have not increased on an annual basis for the past seven months. The last time this occurred was the third and fourth quarter of 2009 when the global economy was still reeling from the financial crisis; however, June's year-over-year decline in construction input prices was the smallest of 2015. Prices of inputs to nonresidential construction industries rose 0.3% on a monthly basis but are down 3.6% on a yearly basis.
"The June figures do not fully reflect the recent decline in global commodity prices ranging from oil to copper," said Associated Builders and Contractors' Chief Economist Anirban Basu. "The marketplace continues to be dominated by crisis economics, with the most recent crisis revolving around Greece. In such circumstances, the market response is to project slower global economic growth and drive commodity prices lower. The specter of Iranian oil flowing into global markets has also impacted certain key input prices. Therefore, June's monthly input price increase should not be viewed as the beginning of a new trend. At some point, input prices will begin to rise, perhaps aggressively, but that time has not yet arrived.
"One of the other major impacts of recent global news has been a stronger U.S. dollar," Basu said. "A stronger dollar yields many implications, one of them being that commodity prices are likely to remain reasonably well-behaved. Stakeholders should not expect a sudden surge in input prices anytime soon, though the potential resolution of the Greek debt crisis for now could also indicate that significant price declines are also not forthcoming in most input categories."
Interestingly, only five key input prices rose in June, while six fell or were flat. The key input prices that increased in June are:
- Crude energy materials prices were up 2.2% in June but are 36% lower year-over-year.
- Fabricated structural metal product prices rose 0.5% for the month and have expanded 0.6% on a year-over-year basis.
- Natural gas prices expanded 12.9% in June but are down 39.6% from the same time one year ago.
- Iron and steel prices expanded 0.8% in June but are down 13.9% from the same time last year.
- Softwood lumber prices expanded 3.6% but are 6.2% lower than a year ago.
The key construction inputs that did not expand for the month include:
- Prices for plumbing fixtures remained flat in June and are up 1.2% on a year-over-year basis.
- Prices for prepared asphalt, tar roofing and siding fell 1.4% for the month and are down 1.2% on a year-ago basis.
- Steel mill products prices fell 1% for the month and are 12.2% lower than one year ago.
- Concrete product prices fell 0.1% in June but are up 4.2% on a yearly basis.
- Crude petroleum prices fell 1.4% in June and are down 44.0% from the same time one year ago.
- Nonferrous wire and cable prices fell 0.8% on a monthly basis and are down 3.1% on a yearly basis.
View the May 2015 PPI report.