The prices of softwood lumber and OSB fell by 3.0% and 0.4%, respectively, in June according to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. In contrast, prices paid for gypsum and ready-mix concrete increased 1.3% and 0.4%, respectively, over the month.
The softwood lumber price index fell for the first time in seven months and was the largest negative percentage change since September 2015. The decline, anomalous in the context of recent softwood lumber price data, can be attributed to:
1. The lag with which the PPI data are released.
2. The mix of softwood lumber products used to create the product-specific index.
The decline in prices is consistent with the Random Lengths Framing Lumber Composite Price (FLCP) over the BLS survey period in June, during which the FLCP fell 1.3%. The difference between the magnitude of June price decreases is mostly due to different goods used to calculate each index. If current softwood lumber price trends continue, July’s PPI report will revert to exhibiting an increase in prices.
OSB prices declined for the first time since December 2016 when they fell 0.5%. Over the five months preceding June, prices paid for OSB had increased 15.2%. Remarkably, even though OSB prices have declined in five of the last 12 months, the index is 20.9% higher than it was one year ago.
Gypsum prices reversed course in June, posting a 1.3% increase after declining 0.2% in May. The price index for gypsum goods has increased by 9.2% over the last 12 months, the majority of which is the result of a 6.2% increase since March.
Increasing by 0.4%, the change in prices paid for ready-mix concrete (seasonally adjusted) was roughly in line with its average since 2000. Prices increased nearly three-quarters of the months over that period by an average of 0.3%.
The economy-wide PPI increased 0.1% in June after no movement in May. Nearly 80% of the increase was driven by a 0.2% rise in prices paid for services. Prices for final demand goods edged up 0.1%, reversing the 0.5% decline seen in May. A modest 0.1% increase in the final demand prices for core goods (i.e. goods excluding food and energy) continued an upward trend that began in November 2016. Prices for core goods less trade services also climbed 0.2%.
Most of the rise in prices for goods was due to a 0.6% increase in prices paid for food. Meat prices moved significantly higher, up 5.5% over the month. Conversely, the index for final demand energy fell 0.5%, led by a 1.1% decline in gasoline prices. The rise in prices for final demand services—the fourth consecutive increase—was led by a 4.0% rise in financial services prices.