September prices for residential construction goods like softwood lumber and ready-mix concrete declined for the second month since the start of the last recession, according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics.
The monthly PPI of most durable goods for a given month is largely dependent on prices paid for goods shipped in the survey month, meaning greater variability for longer lead times.
The PPI for softwood lumber (seasonally adjusted) decreased 3.5% in September after declining 29.0% and 27.7% in July and August, respectively. The slowing of monthly price declines is consistent with cash prices one month earlier, as measured by the Random Lengths Framing Lumber Composite Price (FLCP), as week-over-week declines slowed in August before beginning to increase in September.
The PPI for ready-mix concrete (RMC) decreased 0.5% in September, the first decline since January 2021. The index for RMC has risen 3.0% over the past 12 months and 4.1% YTD—the largest year-to-date increase in September since 2006.
As Congress continues to work on an infrastructure package, the Construction Materials index is particularly salient. This index, which has increased 23.9% year-to-date and 32.1% over the past 12 months, is much more heavily weighted with products used in large amounts in the production of “traditional” infrastructure (e.g., roads, bridges, rail).
Advertisement
Related Stories
Economics
Shelter Costs Drive Inflation Higher Than Expected in January
January Consumer Price Index data show inflation increased more than anticipated as shelter costs continue to rise despite Federal Reserve policy tightening
Economics
Weighing the Effects of the Fed's and Treasury's Latest Announcements
The upshot of the Jan. 31 announcements is that while mortgage rates will stay higher for longer, they're likely to hold steady
Economics
NAHB CEO Tobin Says 'Housing Renaissance' on the Horizon
Responding to positive housing-related data such as falling mortgage rates and increased homebuyer activity, NAHB's CEO Jim Tobin is optimistic