29
Sep

US Construction Material Costing has moved into a Higher Gear – Daily Commercial News

Material costing for U.S. construction projects has moved into a higher gear, according to the latest Producer Price Index (PPI) data released by the Bureau of Labor Statistics (BLS).

Table 1 records that the ‘final demand’ index for construction in August was +1.6% versus three months ago, +2.3% compared with three months ago and +3.3% on a year-over-year (y/y) basis.

The increase for ‘private capital investment’, at +3.3% y/y, was only the tiniest bit slower than for ‘government construction’, +3.4% y/y.

In five non-residential type-of-structure categories, the material input costing hikes ranged from a low of +2.7% y/y for both ‘new office buildings’ and ‘new health care buildings’ to a high of +4.5% y/y for ‘new industrial buildings’.

As for the remaining two categories, ‘new school buildings’ and ‘new warehouses’, they were closer to the top end of the range than the bottom, at +3.9% y/y and +4.1% y/y respectively.

Table 1: U.S. Producer Price Index (PPI) Results
% Change in the August 2017 Index from:

3 Years 1 Year 6 months 3 months 1 month
Ago Ago Ago Ago Ago
Product/Good/Service/Commodity
Final Demand Construction 6.0% 3.3% 2.3% 1.6% 0.3%
Construction for private capital investment 6.1% 3.3% 2.2% 1.6% 0.3%
Construction for Government 5.9% 3.4% 2.3% 1.7% 0.2%
New warehouse building construction 7.2% 4.1% 2.8% 1.7% 0.1%
New school building construction 6.0% 3.9% 2.8% 2.2% 0.2%
New office building construction 6.7% 2.7% 1.5% 1.0% 0.4%
New industrial building construction 6.2% 4.5% 3.0% 2.4% 0.0%
New health care building construction 3.7% 2.7% 2.5% 1.8% 0.4%
Architectural & engineering services 5.9% 1.6% -0.2% -0.4% -1.1%
Construction machinery & equipment 2.9% 0.8% 0.3% 0.0% 0.0%
Asphalt -43.7% 18.5% 9.9% -3.0% -4.7%
Plastic construction products 3.6% 2.9% 2.2% 1.4% 1.3%
Softwood lumber 10.3% 11.3% 7.5% 0.0% 2.5%
Hardwood lumber -8.8% 1.3% 1.9% 2.1% 0.4%
Millwork 7.0% 3.1% 1.9% 0.4% 0.0%
Plywood -5.3% 2.6% 5.7% 0.0% 2.3%
Gypsum 11.2% 8.4% -1.7% -0.5% -1.4%
Insulation materials 5.0% 1.7% 0.5% 0.6% 0.5%
Construction sand, gravel & crushed stone 11.7% 2.8% 1.2% 0.5% -0.3%
Cement 18.3% 4.8% 2.8% -1.3% -0.2%
Ready-mix concrete 12.0% 3.3% 1.9% 0.8% 0.4%
Precast concrete products 5.1% 2.7% 1.4% 0.0% -0.1%
Prestressed concrete products 12.0% 1.4% 1.8% 0.2% -0.2%
Brick (clay) 3.3% 1.6% 1.3% 0.3% 0.0%
Coal -1.2% 4.2% -0.7% -0.4% -0.3%
Iron ore -1.0% 0.0% 9.6% -6.5% -4.9%
Iron and steel scrap -16.3% 29.4% 5.7% 4.8% 5.4%
Steel bars, plates and structural shapes -13.5% 7.1% 3.1% 1.0% 0.2%
Fabricated structural metal products 1.8% 1.8% 1.5% 0.8% 0.3%
Flat glass 8.7% 0.2% -0.2% -0.1% 0.0%
Lighting fixtures 3.9% 1.5% 1.2% 0.1% -0.1%
Plumbing fixtures & brass fittings 3.5% 1.9% 1.2% -0.3% 0.0%
Heating equipment 4.3% -0.2% -0.2% -0.8% -0.5%
Copper wire & cable -10.2% 16.7% 2.5% 3.0% 0.1%
Fiber optic cable -0.5% -0.5% 0.2% 0.0% 0.2%
Regular gasoline unleaded -43.7% 14.4% 2.2% 5.7% 5.7%
Diesel Fuel -36.7% 29.7% 18.8% 9.2% 2.4%
Jet Fuel -43.1% 26.4% 1.1% 8.3% 14.8%
Natural gas -29.0% 7.0% -14.8% -9.0% -1.8%
Natural gas to electric utilities -5.3% 1.1% -7.9% -4.4% -5.6%
Commercial electric power 2.7% 3.4% 7.9% 3.8% 0.1%
Industrial electric power 10.4% 10.6% 7.9% 5.4% -0.8%
Residential electric power 4.2% 2.7% 4.2% 2.9% -0.1%
Commercial natural gas -5.2% 5.8% -2.0% -0.4% -0.1%
Industrial natural gas -14.2% 4.6% -5.4% -0.9% -2.4%
Residential natural gas -3.6% 6.1% 1.8% 1.4% 0.5%
Construction materials 3.4% 3.1% 1.8% 0.5% 0.3%

Data source: Bureau of Labor Statistics (1982 = 100.0 is the base for all indices).
Table: ConstructConnect.

By way of comparison, the All-items Consumer Price Index (CPI-U) in August was more restrained, at +1.9% y/y. Furthermore, the ‘core’ rate of inflation, which leaves out volatile energy and food components, was even less frothy, at only +1.7% y/y. (The ‘core’ rate fell below the all-items rate due to the elimination of the energy sub-index, which was +10.4% y/y.)

Four construction material categories have demonstrated double-digit percentage gains in pricing over the past 12 months: iron and steel scrap, +29.4%; asphalt, +18.5%; copper wire and cable, +16.7%; and softwood lumber, +11.3%.

Notably large y/y increases have also been registered by ‘steel bars, plates and structural shapes’, +7.1%, and cement, +4.8%.

Among energy cost increases, set out in a separate section near the end of Table 1, the most stunning advances have come in ‘diesel fuel’, 29.7% y/y, and ‘industrial electric power’, +10.6% y/y.

The PPI indices provide insight into how construction material costs are performing. What’s happening on the labor side?

According to the latest Employment Situation report from the BLS, the hourly compensation rates for on-site workers have been +2.7% y/y hourly and +3.2% y/y weekly, including supervisory personnel, and +2.8% hourly and +3.6% weekly, leaving out bosses.

It would appear, therefore, that both material and labor costs in construction are currently moving ahead by approximately +3.0% to +3.5% y/y.

The August survey results, however, were compiled before Hurricanes Harvey, Irma and Maria wreaked havoc on southern Texas, much of Florida and the entire island protectorate of Puerto Rico. The damage inflicted on physical structures has been immense.

Massive rebuilding efforts have already been launched, but the time lines will be sure to extend well into 2018. The inflationary impacts from the surge in demand for building materials, and for labor from what was already a depleted nation-wide supply pool, will show up in costing numbers for months to come.

Also included below are graphs showing the historical performances (2000 to the present) of many of the building materials appearing in Table 1.

Graph 1: Softwood Lumber Price Index – U.S.

Softwood Lumber Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 2: Plywood Price Index – U.S.

Plywood Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 3: Gypsum Price Index – U.S.

Gypsum Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 4: Insulation Materials Price Index – U.S.

Insulation Materials  Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 5: Cement Price Index – U.S.

Cement Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 6: Ready-mix Concrete Price Index – U.S.

Ready-mix Concrete Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 7: Iron and Steel Scrap Price Index – U.S.

Iron and Steel Scrap Price Index - U.S.

The last data point is March 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 8: Steel Bars, Plates & Structural Shapes Price Index – U.S.

Steel Bars, Plates & Structual Shapes Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 9: Copper Wire and Cable Price Index – U.S.

Copper Wire and Cable  Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 10: Asphalt Price Index – U.S.

Asphalt Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 11: Diesel Price Index – U.S.

Diesel Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Graph 12: Flat Glass Price Index – U.S.

Flat Glass Price Index - U.S.

The last data point is August 2017.

Data source: U.S. Bureau of Labor Statistics (Producer Price Index/PPI series).
Chart: ConstructConnect.

Let’s block ads! (Why?)



Source by [author_name]