The prices of softwood lumber, gypsum, ready-mix concrete, and OSB all increased in February, according to the latest Producer Price Index release by the Bureau of Labor Statistics, out Tuesday. The increases were led by gypsum products, with softwood lumber a close second.
After decreasing in four of five months, the price of softwood lumber rose in February. Gypsum prices posted a 5.3 per cent increase, the largest increase since January 2015.
US Building Materials Prices
After decreasing in four of five months, the price of softwood lumber rose in February, to the latest Producer Price Index (PPI) release by the Bureau of Labor Statistics. The 4.8 per cent increase was the biggest in four years and largely, if not completely, due to the ongoing softwood lumber trade dispute between the U.S. and Canada. Some softwood products rose as much as 30 per cent during the three-week period from January 27th to February 17th.
Gypsum prices posted a 5.3 per cent increase, the largest increase since January 2015. Prices rose by a total of 6.2 per cent in the first two months of 2017, reversing a three-year trend. The cumulative January/February price increases—which became customary earlier this decade—have slowed in recent years. During this two-month period in 2013, 2014, 2015, and 2016, prices paid for gypsum products rose by 15.8 per cent, 11.8 per cent, 8.6 per cent, and 3.5 per cent, respectively. NAHB will pay close attention to whether the 6.2 per cent increase is an isolated phenomenon or the start of a 2017 trend.
OSB and ready-mix concrete prices climbed by 3 per cent and 0.5 per cent, respectively, in February. The increase in prices paid for OSB pushed the index to its highest level since 2013. As was noted in the February producer price index blog post, the modest increase in ready-mix concrete prices falls in line with a six-year trend that includes only four monthly price declines.
The economy-wide PPI increased 0.3 per cent in February, half the percentage increase in January. Over 80 per cent of the increase was driven by a rise in prices paid for services. Prices for final demand goods moved up 0.3 per cent. A modest 0.1 per cent increase in the final demand prices for core goods (i.e. goods excluding food and energy) continued the upward trend that began in November 2016. Prices for core goods less trade services climbed 0.3 per cent.
Nearly 70 per cent of the rise in prices for goods—the sixth consecutive increase—was due to a 1.6 per cent in- crease in prices paid for electric power. Conversely, the index for gasoline fell 2.5 per cent. The increase in prices for final demand services was broad-based, led by a 4.3 per cent rise in prices paid for traveler accommodation services. Like energy goods prices, the price of services relating to energy also declined, falling 10 per cent.