"The trajectory of prices may become more volatile in the months ahead with financial markets being impacted by ongoing bad news from both Europe and the United States." —ABC Chief Economist Anirban Basu.
In a sign of easing inflation pressure, the nation’s construction materials prices increased 0.1 percent in April, according to the May 11 Producer Price Index report by the U.S. Labor Department. Construction materials prices are up 2.5 percent compared to the same time last year. Nonresidential construction materials prices were unchanged for the month, but are 2.4 percent higher from one year ago.
Nonferrous wire and cable prices rose 0.7 percent for the month, but are down 5.2 percent from April 2011. Prices for fabricated structural metal products were up 0.5 percent for the month and are up 2 percent year over year. Prices for concrete products increased 0.2 percent in April and are up 2 percent compared to the same time last year. Prices for steel mill products inched up 0.2 percent in April, but are down 1.9 percent year over year.
In contrast, prices for prepared asphalt, tar roofing and siding fell 2.6 percent in April and are down 3.3 percent from one year ago. Prices for plumbing fixtures and fittings decreased 0.7 percent for the month, but are up 2.5 percent compared to the same time last year. Softwood lumber prices fell 0.4 percent compared to March, but are still 3 percent higher than the same time last year. Iron and steel prices slipped 0.3 percent in April and are down 1.8 percent year over year.
Crude energy materials prices dropped 6.8 percent in April as crude petroleum prices fell 7.9 percent. Crude energy materials prices are down 16.3 percent compared to the same time last year. Overall, the nation’s wholesale goods prices slipped 0.2 percent for the month, but are 1.9 percent higher than April 2011.
Analysis
“Recent news pertaining to the U.S. nonresidential construction industry has been somehat disheartening of late,” said Associated Builders and Contractors Chief Economist Anirban Basu. “Still, at the very least, contractors have been enjoying the benefits of stable materials prices.
“Construction materials prices are now up just 2.5 percent on a year-over-year basis, and hardly moved in April,” Basu said. “However, the trajectory of prices may become more volatile in the months ahead with financial markets being impacted by ongoing bad news from both Europe and the United States regarding near-term economic prospect.
“While that should lead to a decline in materials prices due to softening demand, commodity markets are often impacted when equity and bond investors reduce their exposure to other assets and move into commodities,” said Basu. “This is what happened during the early months of 2008, and it has occurred on occasion since then.
“At this point in time, there are two scenarios,” Basu said. “One would be a moderation of prices with inflation kept in check. The other worse outcome would be one in which the economy continued to disappoint and materials prices rose."