Construction Material Prices Plunge in November

by Jonathan McGaha | 10 December 2015 12:00 am

Construction input prices fell for the fifth consecutive month in November according to an analysis of the Bureau of Labor Statistics[1]‘ Producer Price Index[2] released today by Associated Builders and Contractors[3] (ABC). Input prices fell 0.4 percent on a monthly basis and are down 4.2 percent on a year-over-year basis. Nonresidential construction prices behaved similarly, falling 0.5 percent month-over-month and 4.6 percent year-over-year. Only two of the 11 key input prices have risen since November 2014.

“There are many factors at work, all helping to push commodity prices lower,” said ABC Chief Economist Anirban Basu. “These factors include a stronger U.S. dollar, weak economic performance among major emerging countries like China, Brazil and Russia, ongoing softness in economies in Europe, OPEC’s recent decision to maintain high levels of output, elevated levels of oil and gas output from private companies wrestling with debt service payments and the impact of energy-saving technologies.

“For now, the world is glutted with key construction inputs ranging from steel and copper to oil and natural gas,” said Basu. “While prices may stabilize during the months ahead, a sharp increase in input prices remains unlikely. With the Federal Reserve Bank contemplating interest rate increases in the near-term, the U.S. dollar could get even stronger in 2016, helping to further suppress input price inflation.”

Only four key input prices rose in November on a monthly basis:

• Softwood lumber prices increased 2.4 percent on a monthly basis, but fell 4.6 percent on a yearly basis.
• Prices for prepared asphalt and tar roofing and siding products rose 2.4 percent from the previous month, but are 2.7 percent lower than at the same time one year ago.
• Plumbing fixtures and fittings prices were up 1.1 percent from October 2015 and 2.1 percent from November 2014.
• Concrete product prices rose 0.3 percent for the month and 2.9 percent on a year-over-year basis.

Seven key input prices fell in November on a monthly basis:

• Natural gas prices plunged 15.4 percent for the month and are 44 percent lower than at the same time one year ago.
• Crude petroleum prices fell 10.4 percent from October 2015 and are down 46.2 percent from November 2014.
• Crude energy materials prices slipped 9.2 percent during the month and are 36.9 percent lower than they were one year ago.
• Iron and steel prices dipped 3.7 percent for the month and 22.8 percent year-over-year.
• Prices for steel mill products fell 3.3 percent on a monthly basis and 18.4 percent on a yearly basis.
• Nonferrous wire and cable prices slid 0.8 percent month-over-month and 7.2 percent year-over-year.
• Prices for fabricated structural metal products fell 0.3 percent for the month and are 0.8 percent lower than at the same time one year ago.

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