Construction Materials

The producer price index (PPI) for final demand increased 0.2%, not seasonally adjusted (but fell -0.1%, seasonally adjusted), in February and 0.9% over 12 months, the Bureau of Labor Statistics (BLS) reported today. The PPI for final demand covers not only the prior headline PPI for finished goods (about 34% of total final demand), but also final demand services (64% of the total) and final demand construction (2% of the total). AGC posted an explanation and tables focusing on construction prices and costs. Construction is limited to five types of nonresidential buildings that BLS says make up 34% of total construction. Other building types, along with residential and nonbuilding construction, are not included. There are separate final demand indexes for private capital investment, government, personal consumption and exports, but only the first two are considered buyers of construction, since housing is not measured and buildings are not exported.

The PPI for final demand construction rose 0.1%, not seasonally adjusted, in February and 3.2% over 12 months. The overall PPI for new nonresidential building construction?a measure of the price contractors say they would charge to put up a fixed set of five categories of buildings?increased 0.1% for the month and 3.4% since February 2013. The PPI for new warehouse construction (11% of the index for new nonresidential buildings) was flat in February and rose 2.6% over 12 months; offices (34% of the total), 0 and 2.9%, respectively; schools (26% of the total), -0.2% and 3.6%; health care buildings (16% of the total), 0 and 3.7%; and industrial buildings (13% of the total), 0 and 4.0%. The PPI for inputs to construction?an average of the cost of all materials used in construction plus items consumed by contractors, such as diesel fuel?rose 0.7% and 0.6%. Major construction materials with notable one- or 12-month price swings included gypsum products, for which the PPI jumped again in February, by 4.1% for the month and 11.6% year-over-year; insulation materials, 1.5% and 8.2%, respectively; lumber and plywood, 1.8% and 7.0%; diesel fuel, 4.4% and -6.0%; and copper and brass mill shapes, -1.5% and -6.8%. PPIs for new, repair and maintenance work on nonresidential buildings by plumbing contractors rose 0.6% and 4.5%; electrical contractors, 0.1 and 2.0%; roofing contractors, -0.1% and 1.7%; and concrete contractors, 0.3% and 1.7%.