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Construction materials price inflation weakens

Construction materials price inflation weakens


By James Haughey, Chief Economist Reed Construction Data | August 11, 2010

Materials price inflation weakened in June following the abrupt drop in demand for materials by homebuilders adjusting to a lower level of demand in their market. Materials inflation is expected to be significantly weaker this summer than over the past year because price increases at the commodity level have been very modest for several months.

Cement prices were steady in June and gypsum prices fell.These materials had been the principal inflation problems earlier in the year. Nonferrous metals and oil based products such as diesel fuel are currently the major inflation worry.Both of these are near their peak prices but little price pullback is expected this year.Ominously, steel prices are now rising again but this is not a repeat of the demand driven price surge in 2004.The recent price rises are simply the up side of a brief inventory cycle.

Construction Materials Price Index % Change in…
            12 months           3 months    1 month
Construction Commodities
Dimension Stone 1.6 0.3 -0.4
Cement 14.5 1.2 0.0
Construction Sand, Gravel & Crushed Stone 8.0 1.1 -0.1
Softwood Plywood -14.6 -7.5 -3.8
Hardwood Lumber 0.8 0.9 0.1
Softwood Lumber -7.3 -6.0 -6.8
Other Commodities
Industrial Natural Gas 3.0 -12.2 -6.7
Plastic Resins & Materials 6.8 -2.0 1.3
Insulation Materials 6.5 0.3 -0.2
Iron & Steel Scrap 73.7 12.6 3.2
Iron Ore 17.4 1.9 0.0
Copper Ores 52.4 21.9 0.0
Copper Base Scrap 86.1 32.6 -0.2
Manufactured Materials
Gypsum Products 23.3 3.7 -0.6
Diesel Fuel 33.0 21.0 3.9
Asphalt Roofing 8.4 -0.4 -1.6
Paint 9.0 0.7 0.0
Plastic Construction Products 19.2 -1.1 -0.1
Vitreous Plumbing Fixtures 2.2 0.0 0.0
Ceramic Tile 0.5 -1.3 0.5
Flat Glass 2.4 0.0 0.3
Fabricated Building Steel 5.2 1.2 0.7
Architectural Metalwork 2.5 1.5 1.5
Metal Plumbing Fixtures 3.1 0.9 -0.1
Builders' Hardware 4.5 1.7 1.7
Sheet Metal Products 4.8 2.2 1.9
Steel Pipe and Tube 4.9 4.0 2.4
Nonferrous Pipe and Tube 115.9 58.7 16.3
Building Brick 9.2 1.2 0.3
Ready Mix Concrete 13.0 2.0 0.3
Concrete Block & Brick 7.5 0.7 0.0
Prestressed Concrete 18.0 3.9 0.4
Precast Concrete Products 5.8 -0.1 -1.0
Concrete Pipe 5.2 0.0 -0.1
Wood Kitchen Cabinets 2.3 0.6 -0.1
Millwork (window,door, cabinet) 3.0 0.7 0.4
Engineered Wood Products 0.8 -1.2 -0.6
Assembled Equipment
Hand and Edge tools 5.2 1.0 0.1
Power Hand Tools -1.2 -1.0 0.0
Furnaces 1.5 0.5 0.2
Construction Machinery 3.9 0.0 0.1
Metal Doors, Sash and Trim 3.1 1.7 -0.6
Summary
Construction Materials (commodities) 7.7 1.9 0.3
Inputs to Construction Industries (finished products) 9.3 3.1 0.4
Inputs to nonresidential Construction 11.2 4.1 0.5
Inputs to multi-family Construction 8.7 2.5 0.3
Source: Producer Price Index. Bureau of Labor Statistics
Source: US Department of Labor, Federal
Reserve Board, Census Bureau
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