ABC: Construction material prices continue free fall in December

In December, construction material prices fell for the sixth consecutive month. Prices have declined 7.2% since peaking in August 2014.

January 15, 2016 |

Photo: Dennis S. Hurd/Creative Commons.

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.
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