Construction material prices plunge in September

Words: Jeff ActonPrices for inputs to construction industries plunged 1.6 percent in September after shedding 0.9 percent in August, the Bureau of Labor Statistics reported. Year-over-year prices were down 5.3 percent for the month, the largest yearly decrease since October of 2009. Inputs to nonresidential construction prices also declined, losing 1.6 percent for the month and 6 percent 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 analysis by 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.

“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.”

Only three key input prices rose in September:

Plumbing fixtures and fittings expanded 0.1 percent from August and are up 1.1 percent from September 2014.
Prices for concrete products expanded 0.7 percent in September and are up 3 percent from the same time last year.
Crude petroleum prices expanded 2.3 percent in September but are down 54.3 percent from the same time last year.

The key input prices that fell or remained flat are:

Crude energy materials prices dipped 1 percent in September and are down 39.9 percent from the same time last year.
Fabricated structural metal product prices fell 0.l percent for the month and are down 0.6 percent on the year.
Iron and steel prices fell 1.1 percent for the month and 18.8 percent for the year.
Prices for steel mill products fell 0.8 percent from last month and 14.9 percent from last year.
Nonferrous wire and cable prices are down 0.8 percent in September and 7.8 percent from the same time last year.
Softwood lumber prices fell 3.8 percent on a monthly basis and 12.2 percent on a yearly basis.
Prepared asphalt, tar roofing and siding declined 1.9 percent for the month but expanded 2.5 percent from the same time last year.
Natural gas prices fell 7.5 percent on a monthly basis and are down 35.8 percent from the same time last year.

Construction material prices plunge in September

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