Producer Prices in March – Gypsum Continues to Rise

The Bureau of Labor Statistics (BLS) released the Producer Price Indexes (PPI) for March last week. The PPI for finished goods was unchanged from February on a seasonally adjusted basis, as a 1.0 percent decline in energy prices offset a 0.2 percent increase in food goods and a 0.3 percent increase in the core index (i.e., finished goods less food and energy).

With respect to building materials, gypsum prices continue to be the main driver for residential construction cost increases in 2012, rising 2.2 percent in March, after increases of 5.9 percent and 5.1 percent in January and February, raising gypsum prices 17.7 percent above the most recent low in February of 2011.

Lumber prices rose 0.9 percent in March while cement prices declined 0.4 percent, pushing the aggregate index for residential construction up 1.1 percent for the month. This brings residential construction costs to 13.0 percent above the mid-2009 lows.

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