Construction material prices fell for the sixth consecutive month in December, losing 1.2% on a monthly basis and 4% on a yearly basis according to an analysis of the Bureau of Labor Statistics Producer Price Index released by Associated Builders and Contractors (ABC).
Construction input prices have fallen 7.2% since peaking in August 2014, and have fallen in 11 of the previous 16 months. Nonresidential construction input prices exhibited similar declines, falling 1.1% for the month and 4% for the year.
"Construction input prices continued to sink to the end of 2015, due in large measure to global deflationary forces that have become increasingly apparent," said ABC Chief Economist Anirban Basu. "The World Bank predicts that the global economy will expand by less than 3% in 2016, very limited growth by historic standards. Last year, the global economy expanded by just 2.4%, with significant weakness recorded in much of the emerging world. Like last year, major emerging nations like Russia and Brazil are anticipated to be in recession.
"In addition, the U.S. dollar remains strong," Basu said. "With only a couple of exceptions, the U.S. is the only major nation to increase interest rates. If interest rates rise as anticipated, the dollar will strengthen further in 2016, placing additional downward pressure on input prices. Even significant geopolitical events involving oil producing nations has not been enough to stem the decline in oil or other commodity prices."
Only four key input prices expanded in December on a monthly basis:
- Natural gas prices expanded 5.2% month-over-month but are down 46.5% year-over-year.
- Prices for prepared asphalt and tar roofing and siding products rose 1% on a monthly basis but are down 2% on a yearly basis.
- Concrete product prices ticked 0.3% higher from November and are up 3% from the same time one year ago.
- Fabricated structural metal product prices inched 0.1% higher for the month but are 0.9% lower than at the same time one year ago.
Seven key input prices fell in December on a monthly basis:
- Crude petroleum prices plunged 16% month-over-month and are 43.3% lower year-over-year.
- Crude energy materials prices fell 5.7% for the month and are down 35.8% for the year.
- Softwood lumber prices shed 2.9% from November and are 6.8% lower than at the same time one year ago.
- Steel mill product prices dipped 2.7% for the month and 19.8% for the year.
- Prices for nonferrous wire and cable fell 2.7% on a monthly basis and are down 9.9% on a yearly basis.
- Iron and steel prices are down 2.2% for the month and 23.7% for the year.
- Prices for plumbing fixtures and fittings fell 0.5% month-over-month but expanded 1.3% year-over-year.
Related Stories
Industry Research | Apr 7, 2016
CBRE provides latest insight into healthcare real estate investors’ strategies
Survey respondents are targeting smaller acquisitions, at a time when market cap rates are narrowing for different product types.
Market Data | Apr 4, 2016
ABC: Nonresidential spending slip in February no cause for alarm
Spending in the nonresidential sector totaled $690.3 billion on a seasonally adjusted, annualized basis in February. The figure is a step back but still significantly higher than one year ago.
Market Data | Mar 30, 2016
10 trends for commercial real estate: JLL report
The report looks at global threats and opportunities, and how CRE firms are managing their expectations for growth.
Market Data | Mar 23, 2016
AIA: Modest expansion for Architecture Billings Index
Business conditions softening most in Midwest in recent months.
Retail Centers | Mar 16, 2016
Food and technology will help tomorrow’s malls survive, says CallisonRTKL
CallisonRTKL foresees future retail centers as hubs with live/work/play components.
Market Data | Mar 6, 2016
Real estate execs measure success by how well they manage ‘talent,’ costs, and growth
A new CBRE survey finds more companies leaning toward “smarter” workspaces.
Market Data | Mar 1, 2016
ABC: Nonresidential spending regains momentum in January
Nonresidential construction spending expanded 2.5% on a monthly basis and 12.3% on a yearly basis, totaling $701.9 billion. Spending increased in January in 10 of 16 nonresidential construction sectors.
Market Data | Mar 1, 2016
Leopardo releases 2016 Construction Economics Report
This year’s report shows that spending in 2015 reached the highest level since the Great Recession. Total spending on U.S. construction grew 10.5% to $1.1 trillion, the largest year-over-year gain since 2007.
Market Data | Feb 26, 2016
JLL upbeat about construction through 2016
Its latest report cautions about ongoing cost increases related to finding skilled laborers.
Market Data | Feb 17, 2016
AIA reports slight contraction in Architecture Billings Index
Multifamily residential sector improving after sluggish 2015.