This month’s Electrical Price Index showed that January prices for electrical products aren’t growing as fast as they had been over the past year and in some cases are showing some notable declines. You can spot the same mixed pricing picture for other key construction materials. For example, the price for a pound of copper on the COMEX exchange is down -7.5% year-over-year, according to www.macrotrends.net, and the monthly drop in January came in at -2.2%.
Prices for several other key construction materials were also mixed, according to the January data in the Producer Price Index (PPI) available from the U.S. Bureau of Labor Statistics. Plastic construction products were up +7% YOY, but lumber and plywood prices dropped -30.8% in January. Pricing for steel products used in the construction industry were all over the place. Steel mill products saw a -30.1% drop YOY, but steel pipe and tube were down -10% YOY. Fabricated structural metal was up +3.2% YOY, but sheet metal prices were up +6.1%.
The Associated General Contractors (AGC) publishes a monthly analysis of construction material prices, and the most recent report commented on the broad mix of price changes. According to the press release, “Contractors encountered a wide range of price changes for key construction inputs in January, with steep increases for fuel, concrete and gypsum products offsetting sharp declines in lumber and steel prices, according to an analysis by the Associated General Contractors of America of government data. Association officials said a lack of clarity from officials in Washington as to what materials may be used on federally assisted projects is adding to price disparities.
Ken Simonson, AGC’s chief economist said in the press release that contractors and suppliers can expect a volatile pricing climate throughout 2023. “Producer price indexes for construction inputs moderated over the past year but many items increased again in January,” he said. “With demand shifting among project types, prices for many inputs are likely to diverge further in 2023.”
The Producer Price Index for inputs to new nonresidential construction — the prices charged by goods producers and service providers such as distributors and transportation firms — jumped +0.9% last month but rose by a relatively modest +4.3% from Jan. 2022. Falling demand for new homes drove the index for new single-family construction down to a year-over-year increase of just +0.2%.
The increase in January was driven by several inputs. The Producer Price Index for diesel fuel soared +7.1% for the month and +22.8% over 12 months. The PPI for cement leaped +7.7% in January and +17.8% compared to a year earlier. That, in turn, fueled an increase in the index for concrete products of +1.8% for the month and +14.8% year-over-year. The indexes for architectural coatings, such as paint, and gypsum building materials such as wallboard, were flat for the month but climbed +15.8% and +11.1%, respectively over the year. These increases more than offset several declining prices, including the previously mentioned declines in the Producer Price Index for steel mill products and lumber and plywood.