Construction materials prices throughout the United States edged up in the month of March, the latest figures indicate.
The US Labour Department?s April 20122 producer price index report indicates that in March, overall prices for construction materials throughout the United States rose by 1.4 percent. Softwood lumber led the pack, rising 2.4 percent during the month, though prices for this material are barely up at all (0.5 percent) when compared with the same month last year. Other materials to rise include plumbing fixtures and fittings (0.6 percent) and concrete (0.6 percent). Prices for prepared asphalt and iron and steel edged up 0.2 percent and 0.1 percent respectively, but prices for each of these are only negligibly higher than they were at the same time last year.
Price falls, on the other hand, were recorded for nonferrous wire and cable (down 1.3 percent), steel (down 0.6 percent) and fabricated structural metal products (0.2 percent). Prices were also down in the area of crude energy materials 9.2 percent) and crude petroleum (11.2 percent).
Associated Builders and Contractors (ABC) Chief Economist Anirban Basu welcomed the figures, saying that the steady nature of prices aside from softwood lumber (which, as stated above, rose only after a year of minimal increase) was a positive development for the industry. But he cautions that a 4 percent increase in non-residential construction prices over the course of the past year is a cause for concern.
“Given lingering excess capacity among the contracting community and a general lack of pricing power, the increase in input prices during the past year likely has been enough to squeeze profit margins further for contractors” Basu says.
“In addition, recent months have generally seen less vigorous increases in materials prices, which is a reflection of many factors, including a weak construction spending recovery in the United States”.
Basu says the contraction in energy prices was a pleasant surprise.
“Analysts have been predicting for months that oil and other energy prices are set to surge, in part because of geopolitics”.
“But that did not occur in March, creating a source of relief for an industry that uses substantial amounts of diesel fuel to transport materials in addition to using many other forms of energy throughout the construction process”.