The producer price index (PPI) report from the Bureau of Labor Statistics (BLS) stated that construction materials prices rose 0.2 percent month-over-month in May on a seasonally adjusted basis. The index of components and materials for construction was up 1.9 percent from its year-earlier level.
Overall prices for processed goods for intermediate demand were up 0.1 percent for the month. The largest gain was again for materials for durable manufacturing, which rose 2.2 percent. The volatile price index of processed fuels and lubricants fell again this month, dropping 1.2 percent. The overall processed goods for intermediate demand index was 1.9 percent higher than its year-earlier level.
For reference, the changes in these indexes compare with a 0.1 percent month-over-month rise and a 2.4 percent year-over-year rise in the seasonally adjusted all-items consumer price index (CPI-U) in May.
Yield Pro compiled the BLS reported changes for our standard list of construction materials prices. These are prices of materials which directly impact the cost of constructing an apartment building. The first two right hand columns of the table provide the percent change in the price of the commodity and the percent change in price from April (1 Mo PC Change) and from a year earlier (12 Mo PC Change). If no price data is available for a given commodity, the change is listed as N/A.
The pre-COVID column lists the change in the current construction materials prices relative to the average of prices from December 2019 through February 2020, before the pandemic impacted the economy. This provides a longer-term view of construction materials price trends.
The prices used by the BLS in compiling the indexes are collected on the Tuesday of the week containing the 13th day of the month. In May that would have been May 13. In the June report, the data collection date will be June 10.
The first chart, below, shows the price index history for wood products over the past 37 months.
The softwood lumber price index continued its recent downward trend in May. However, its 9.1 percent rise for the year is the largest year-over-year increase of the construction materials prices that we track.
Last month’s soft plywood price index was revised 1.5 percent lower this month. Therefore, while its price index was reported to have risen this month, it is actually lower than the value reported last month by 1.2 percent.
The next chart, below, shows the recent history of several other construction materials prices. These are relatively simple commodities whose prices are strongly driven by those of the materials of which they are comprised.
The prices of metals have been volatile recently and that has been reflected in the indexes of this group of construction materials prices that we track.
The price index for hot-rolled steel bars had the second largest upward move this month, behind only asphalt roofing and siding. In addition, last month’s hot-rolled steel bar price index was revised higher by 0.4 percentage points, so the index was up 3.2 percent from the preliminary value reported last month.
Last month, the price index for copper wire was reported to have the largest gain of the construction materials prices we track. This month it was reported to have the second largest decline.
The price index for power wire has, which had been rising recently, took a small step back this month. It was down 0.1 percent on top of a 0.1 percentage point downward revision to last month’s index value.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below.
These construction materials prices have been sticky recently. They may go several months with little or no changes and then make a sudden jump. Only two of these construction materials price indexes showed movement in May.
The price index for plumbing fixtures and fittings rose 1.1 percent. This followed last month’s 1.3 percent rise. However, these rises followed the January through March period in which the price index was unchanged.
The price index for major appliances was up 0.6 percent for the month. It has now risen 1.1 percent over the last two months, but is only up 0.9 percent year-over-year.
The full current BLS report can be found here.
Source : Yield PRO