Prices for inputs to construction industries plunged 1.6% in September after shedding 0.9% in August, the Bureau of Labor Statistics reported on October 14. Year-over-year prices were down 5.3% for the month, the largest yearly decrease since October 2009.
Inputs to nonresidential construction prices also declined, losing 1.6% for the month and 6% for the year. Only three of the 11 key input prices expanded on a monthly basis in September while six experienced double-digit year-over-year declines, according to an analysis by the Associated Builders and Contractors.
“The global economy has continued to soften in recent weeks, with additional concerns directed at formerly fast-growing nations like China, Brazil and Russia,” said ABC Chief Economist Anirban Basu. “Europe continues to muddle along, and the Canadian economy remains relatively flat. All of this has conspired to weaken demand for global commodities even as supply of many inputs continues to be elevated,” he said.
“For much of September, there was a belief among some that the Federal Reserve would raise short-term interest rates during that month,” said Basu. “That belief helped keep the dollar strong, which also helped to keep commodity prices low. When the Fed made the decision not to raise rates, the dollar weakened a bit, allowing oil prices to edge higher. The implication is that October PPI is unlikely to be as deflationary as September,” Basu said.
Only three key input prices rose in September:
• Plumbing fixtures and fittings expanded 0.1% from August and are up 1.1% from September 2014.
• Prices for concrete products expanded 0.7% in September and are up 3% from the same time last year.
• Crude petroleum prices expanded 2.3% in September but are down 54.3% from the same time last year.
The key input prices that fell or remained flat are:
• Crude energy materials prices dipped 1% in September and are down 39.9% from the same time last year.
• Fabricated structural metal product prices fell 0.l% for the month and are down 0.6% on the year.
• Iron and steel prices fell 1.1% for the month and 18.8% for the year.
• Prices for steel mill products fell 0.8% from last month and 14.9% from last year.
• Nonferrous wire and cable prices are down 0.8% in September and 7.8% from the same time last year.
• Softwood lumber prices fell 3.8% on a monthly basis and 12.2% on a yearly basis.
• Prepared asphalt, tar roofing and siding declined 1.9% for the month but expanded 2.5% from the same time last year.
• Natural gas prices fell 7.5% on a monthly basis and are down 35.8% from the same time last year.