The price of softwood lumber rose by 2.3 per cent in December, while prices paid for ready-mix concrete, gypsum products, and OSB all fell, according to the latest Producer Price Index release by the Bureau of Labor Statistics January 13. The 2.3 per cent increase in the softwood lumber price index is the largest monthly increase since April 2016.
US Building Materials Price Index: December 2016
Ready-mix concrete, gypsum products and OSB prices fell by 0.1 per cent, 0.2 per cent, and 1.3 per cent, respectively. The 2.3 per cent increase in the softwood lumber price index is the largest monthly increase since April 2016.
Over the course of 2016, softwood lumber prices rose nearly 8.7 per cent while prices paid for OSB spiked by 13.8 per cent. In November, the cost of ready-mix concrete and gypsum products rose 3.5 per cent and 5 per cent, respectively, on a year-over-year basis.
OSB PRICE INDEX
In contrast to the price of softwood lumber–which has been relatively stable over the last two years–OSB prices have risen almost 30 per cent during the same period. OSB prices levelled off in August 2016, but remain near their two-year high.
PRODUCER PRICE INDEX
The economy-wide PPI increased 0.3 per cent in December, 80 per cent of which was driven by a 0.7 per cent rise in prices paid for goods. Prices for final demand services rose only 0.1 per cent. A 0.3 per cent increase in the final demand prices for core goods (i.e. goods excluding food and energy) continued a positive trend that started with a 0.2 per cent increase in November. Prices for core goods less trade services climbed 0.1 per cent and rose 1.7 per cent in 2016, far outpacing the 0.3 per cent rise seen in 2015.
Sixty per cent of the rise in prices for goods—the fourth straight increase—was due to the increase in prices of final demand energy. Gasoline prices alone (+7.8%) accounted for nearly half of the increase. In contrast, prices of fruit and residential electric power led declines among goods. The increase in prices for final demand services was led by securities brokerage, investment advice, and related services, which advanced 4.4 per cent.
NONRESIDENT INPUT PRICES
Nonresidential input prices collectively experienced a slightly larger increase, due in part to surging iron and steel prices, rising 0.6 per cent for the month and 2.2 per cent on the year, said the Associated Builders and Contractors also January 13. Though a number of in- put categories have experienced significant increases in prices in recent months, the overall price gains are largely attributable to energy prices. Crude petroleum prices rose 18.9 per cent for the month, natural gas prices rose 23.1 per cent and unprocessed energy ma- terials rose 14.6 per cent. Concrete products and the category that includes prepared asphalt experienced minimal declines in prices in December.
STEADY RISE IN BUILDING MATERIALS PRICES
Other factors have also led to a steady rise in materials prices including an improving global economy. While not accelerating dramatically, global economic growth in 2017 is expected to exceed 2016’s performance, with nations like Brazil and Russia no longer mired in deep recessions. US economic growth is also expected to be stronger in 2017, lifting the overall global eco- nomic outlook and supporting more bullish commodity markets. Despite recent signs of economic improvement, massive levels of debt and commercial vacancy in much of the world will constrain both worldwide economic growth and global construction.