Operations & Technology

PPI, CPI Show Mixed Patterns; McGraw-Hill New Starts Fall

February 25, 2009
/ Print / Reprints /
ShareMore
/ Text Size+
Retailers, utilities pull back.

The producer price index (PPI) for finished goods climbed 0.9% in January, not seasonally adjusted (0.8%, seasonally adjusted), but fell 1.0% compared to January 2008, the Bureau of Labor Statistics (BLS) reported on Thursday. The PPI for construction inputs fell 0.3% for the month, not seasonally adjusted, and rose 1.8% from a year earlier. The PPI for highway and street construction inputs rose 0.4% in January and fell 1.4% over 12 months. PPIs for other segments fell for the month but rose from a year before: other heavy construction, -0.4% and 0.1%; nonresidential buildings, -0.3% and 1.2%; multi-unit residential, -0.1% and 2.2%; and single-unit residential, -0.4% and 4.0%.

The divergent results reflect differing trends in prices of individual materials. There were substantial increases in January in the prices of ready-mixed concrete, 2.3% for the month and 5.7% over 12 months, and its ingredients-cement, 1.2% and 0.9%, and construction sand/gravel/crushed stone, 1.3% and 6.0%. There were also increases for gypsum products, 1.0% and 8.7%; construction machinery and equipment, 0.4% and 4.9%; and plastic construction products, 0.3% and 3.5%. Prices fell in January for aluminum mill shapes, -7.6% and -12%; asphalt paving mixtures and blocks, -6.2% and 23%; steel mill products, -5.8% and -2.2%; copper and brass mill shapes, -5.4% and 19%; and diesel fuel, -4.3% and -41%.

The consumer price index (CPI) for all urban consumers rose 0.4% in January, not seasonally adjusted (0.3%, seasonally adjusted), but was unchanged over a 12-month period for the first time since 1955, BLS reported on Friday. The CPI for urban wage earners and clerical workers (CPI-W), which is used to adjust many labor contracts in construction and other industries, fell 0.5% over the past 12 months.

The value of new construction starts fell 3% in January, McGraw-Hill Construction (MHC) reported on Thursday, based on its own data compilation. “The housing sector continued its extended slide, and it was joined by a further loss of momentum for nonresidential building. At the same time, nonbuilding construction in January cushioned the total construction downturn relative to December, with gains reported for nonbuilding’s public works and electric utility segments. ‘The construction starts data showed a declining trend over the course of 2008, and this has continued through the first month of 2009,’ stated Robert A. Murray, vice president of economic affairs for [MHC]. ‘January’s pattern was similar to what occurred during 2008-more weakness for housing, combined with a mounting loss of momentum for commercial building. At the same time, public works has been able to hold up relatively well, even with the erosion in state and local finances.’ Nonresidential building retreated 11% in January, with offices -5%; stores, -21%; hotels, -33%; and warehouses, -54%.”

Transportation terminal work “soared 515%. This reflected the start of two large airport terminal projects-a massive $1.2 billion project in Las Vegas and a $316 million project in Sacramento….For the 12 months ending January 2009, total construction was down 19%,” with nonresidential building, -9%; building, -40%; and nonbuilding construction, +5%.

The downturn in retail construction seems likely to continue. “Lowe’s said it is curtailing new-store expansion in light of the weak economy,” the Wall Street Journal reported on Saturday. “It now expects to open 60 to 70 stores this year, compared with a forecast of up to 85 new stores that the…chain outlined in September. It opened 115 stores last year.” On January 27, the Journal reported, “Home Depot said it is shuttering its 34 Home Expo Design Centers….Home Depot plans to open 12 of its core home-improvement stores [in 2009], down from the 30 to 40 stores it previously expected.”

On January 29, USA Today reported, “Starbucks will close…about 200 [stores] in the U.S. These closings are in addition to the 600 [announced last fall]. Starbucks will open 140 stores-60 fewer than its previous target of 200.” Chico’s FAS announced it would close 25 stores; Ruby Tuesday said it would close 40 restaurants early in 2009 and 30 more over the next several years. In contrast, Hennes & Mauritz “said it plans to open 225 stores this year, including its first branch in Beijing,” the Journal reported last month.

Power construction, which grew 33% in 2008, according to a February 2 report by the Census Bureau, may be in for slower growth this year, despite $11 billion in the stimulus bill for “smart grid” construction and incentives for wind and other alternative power. In a presentation to the Construction Users Roundtable on February 11, Mark Agnew, director of financial analysis for Edison Electric Institute, estimated that capital expenditures of U.S. shareholder-owned electric utilities would decline 10% or more in 2009, although the longer-term trend is still upward.

“American Electric Power Co. said…it will cut capital spending by about $1.2 billion this year, versus last year, to $2.5 billion,” the Journal reported Jan. 30. Florida Power & Light “said it will cut capital spending $400 million this year….David Ratcliffe, Southern’s chief executive, said he plans to trim $200 million from capital spending, about 5%, mostly by delaying upgrades that aren’t critically needed….In Washington state, Avista Corp….is delaying a wind project until 2013.”

One category that still seems positive is manufacturing construction, which led all types last year with a 51% jump over 2007, Census reported Feb. 2. Manufacturing construction starts in January rose “25%, helped by the start of a $500 million steel plant upgrade in Pennsylvania,” MHC reported on Thursday. Intel Corp. announced Feb. 10 that it would spend $7 billion over the next two years, though mainly on equipment, to upgrade its U.S. plants.

Did you enjoy this article? Click here to subscribe to Supply House Times. Stay connected with us via social media.

Recent Articles by Ken Simonson

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

BNP Media's Plumbing Group Visits Grundfos North American Headquarters

BNP Media’s Plumbing Group, comprised of the Plumbing & Mechanical, Supply House Times, PM Engineer (pme) and Reeves Journal brands, recently visited Grundfos’ new North American headquarters building in the western Chicago suburb of Downers Grove, Ill.

8/26/14 1:00 pm EST

Free Webinar: Low Temperature Heat Emitter Options in Hydronic Systems

With proper design, you can create systems that require supply water temperatures no higher than 120° F under design load conditions.

Supply House Times

SHT September 2014 cover

2014 September

Our cover this month features incoming ASA President Rick Fantham, who holds the dual roles of president and CEO of Hajoca Corp., and London, Ontario-based Emco.

Table Of Contents Subscribe

Supply House Times Poll

Back to School

It’s back-to-school time, how do you stay knowledgeable on the industry:
View Results Poll Archive

The Supply House Times Store

plumbing-hvac.gif
2014 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

CS-OflRGBhomepage.jpgWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Premier 125

Premier 125 button

The information SUPPLY HOUSE TIMES uses to rank the Premier 125 is the most accurate we can gather. It is primarily based on responses to a questionnaire we send to the wholesalers in our database, supplemented with information obtained from industry reports and estimates.

STAY CONNECTED

facebook Twitter Updated icon Youtube Updated icon    LinkedIn Updated icon  Google+