The PPI for finished goods increased 0.7% in April, seasonally adjusted, following advances of 1% in March and 1.3% in February, the Bureau of Labor Statistics (BLS) reported.
The producer price index (PPI) for finished goods increased
0.7% in April, seasonally adjusted, following advances of 1% in March and 1.3%
in February, the Bureau of Labor Statistics (BLS) reported. Over the past 12
months, the index rose 3.2%. The “core” index, which omits volatile food and
energy prices, was unchanged in the past two months and rose just 1.5% for the
12-month span. The PPI for construction materials and components climbed 0.6%
in April and 3% over 12 months. Among BLS’s five construction segments, the
indexes for materials for heavy construction climbed 1.9% for the month and
4.8% over 12 months; nonresidential buildings, 1.2% and 3.3%; multi-unit
residential, 0.8% and 3.5%; and single-unit residential, 0.6% and 2.7%. Among
major construction inputs, the PPI for diesel fuel jumped 8.1% for the month
but only 3.3% over 12 months; concrete products, 0 and 4.6%; plastic
construction products, 0.6% and -1.9%; gypsum products, -2.1% and -6.6%; steel
mill products, 4.4% and 17%; copper and brass mill shapes, 16% and 27%; lumber
and plywood, 0.2% and -10%. Of the three new PPIs for finished structures, the
index for warehouse construction fell 0.3% for the month and rose 6% over 12
months; school construction, -0.1% and 14%; and the index for office
construction, 0.7% for the month and 7.3% over the 10 months since its
introduction. BLS also made mostly minor adjustments to final 2006 PPIs.
Indicators for future price movements of construction inputs
are mixed. Copper futures have moved up 25% this year but were little changed
this week and are 10% below last May’s record. In its monthly Short-Term Energy
Outlook (www.eia.doe.gov/steo), released
on Tuesday, EIA forecasted that heating oil would average $2.38 per gallon, up
The construction material experiencing some of the steepest
price increases is stainless steel. Two ingredients for making stainless are
nickel, the price of which set another record today on the London Metals
Exchange, and stainless steel scrap. The Wall Street
Journal, citing Ryan’s Notes reporting service, reported today that
Thursday’s spot price for stainless steel scrap was up 168% from a year ago.
Although manufacturing employment has been declining and new
orders for U.S. manufactured goods have been volatile, manufacturing construction
is rising strongly. Recently, the supervisory board of Germany-based
ThyssenKrupp AG approved a $4.2 billion investment in a new plant to make flat
carbon and stainless steel in Mt. Vernon, AL, 35 miles north of Mobile.
“Approximately 29,000 jobs will be generated during the construction phase,”
according to a release on the state website, www.alabama.gov. Output will
include construction products. Additional construction will result from
state-promised investment in infrastructure and training facilities. The Census
Bureau reported last week that spending on manufacturing structures rose 16%
from the first quarter of 2006 to January-March 2007.
This information was supplied by The Data
DIGest, a weekly summary of economic news compiled by Kenneth
D. Simonson, chief economist for the Associated General Contractors of America. All rights reserved.
Bureau of Labor Statistics Reports Construction PPIs, Futures Prices Show Mixed Trends
May 15, 2007