Construction input prices fell for the eighth consecutive month during February, according to data from the Bureau of Labor Statistics Producer Price Index.
Construction input prices fell 0.6% on monthly basis in February and 3.7% on a yearly basis. Inputs to nonresidential construction fell even further, declining 0.7% from January 2016 and 3.8% from February 2015. Prices for eight of the 11 key inputs declined on a monthly basis in February, while nine of the 11 key inputs experienced year-over-year price declines.
“Weak global growth and the prospects of a strengthening U.S. dollar have helped suppress commodity and therefore material prices,” said Associated Builders and Contractors Chief Economist Anirban Basu.
“The February PPI data do not reflect the more recent increases in various commodity prices, ranging in oil to iron ore, and it is quite likely that in construction materials prices will rebound some in March. However, a significant run-up in prices is unlikely in the coming months, as little has changed to support stronger commodity prices,” Basu said.
“Financial markets remain shaky,” he added. “Brazil and Russia remain in recession, and Chinese growth continues at its worst pace in at least two decades. Europe continues to recover, only slowly, and the United States continues to expand at a lackluster pace.
“The Japanese central bank recently introduced negative interest rates, matching what European monetary policymakers have had in place for quite some time. By contrast, the presumption is that the Federal Reserve will be raising rates later this year,” Basu said.
Three key input prices expanded in February on a monthly basis:
- Prices for prepared asphalt and tar and roofing and siding products increased by 0.5% from January 2016 but are down 1.5% from February 2015.
- Concrete product prices expanded by 0.3% month-over-month and 2.5% year-over-year.
- Natural gas prices rose 1.1% for the month but are down 22.3% from the same time last year.
Eight key input prices declined on a monthly basis:
- Crude petroleum prices fell 9% from January 2016 and are down 48.5% from February 2015.
- Unprocessed energy material prices fell 3.2% on a monthly basis and 28.8% on a yearly basis.
- Fabricated structural metal prices products fell 0.5% month-over-month and 2.4% year-over-year.
- Prices for steel mill products fell 1% on a monthly basis and are down 17.7% on a yearly basis.
- Prices for plumbing fixtures and fittings fell 0.2% for the month but are up 0.3% from the same time last year.
- Nonferrous wire and cable prices fell 4% on a monthly basis and 8.4% on a yearly basis.
- Iron and steel prices fell 0.3% month-over-month and have declined 17.6% year-over-year.
Softwood lumber prices fell 0.4% for the month and 6.4% from the same time last year.