Key Building Materials Remain Stubbornly Expensive

Inflation in prices received for building materials (prior to sales to consumers) was mixed in September according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. Although their monthly changes were relatively modest, the prices of OSB and ready-mix concrete have been trending upward for quite some time and remain at historically high levels.

OSB prices climbed 2.5% in September, continuing a 7-month trend that has the commodity at its highest price since June 2013. Since February, monthly increases have averaged 3.2%, pushing prices up by a cumulative, eye-popping 25%.

2016-10-ppi-osb-prices1

In addition, although the price of ready-mix concrete fell marginally in September, the long-term trend remains concerning. Monthly increases have averaged 0.3% over the last five years as the price of ready-mix concrete has steadily risen by roughly 20%.  While gypsum prices picked up (+0.1%), the prices of softwood lumber and steel mill products fell by 1.4% and 0.5%, respectively.

2016-10-ppi-grmcsl

After holding steady in August, the economy-wide PPI rose 0.3% in September. Over three-quarters of the increase was the result of a 0.7% increase in prices for goods, while the rise in prices for services was a more modest 0.1%. Final demand prices for core goods (i.e. goods excluding food and energy) inched up 0.3%, and prices for core goods less trade services rose 1.5% over the 12 months ended in September. This represented the largest 12-month increase in two years.

Nearly one-third of the rise in prices for goods was attributable to 5.3% jump in gasoline prices. The indexes for other energy goods such as diesel fuel, jet fuel, and residential natural gas also moved higher. Prices for final demand services were buoyed by a 0.2% increase in prices of services less trade, transportation, and warehousing, which was advanced by a 3.9% increase in prices for the subcategory of financial-related services.

 

 

 

 



Tags: , , , , , , , , , , ,

Leave a Reply

Your email address will not be published. Required fields are marked *