ABC: Materials prices may continue to rise
May 19, 2010
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Iron and steel jumped 5.1 percent last month and
are 37.7 percent higher than April 2009’s figures.
Construction materials and supplies prices rose 1.1 percent in April, according to figures released Tuesday by the U.S. Labor Department.
Experts with the Associated Builders and Contractors do not expect the trend to stop anytime soon. Construction materials prices have increased for the last six months and are up 5.7 percent compared with the same period last year, the U.S. government said.
Iron and steel jumped 5.1 percent last month and are 37.7 percent higher than April 2009’s figures. Fabricated structural metal products cost 1.1 percent more in April, but are down 1.5 percent compared with last year.
Energy prices are on the decline, however. Crude energy prices dropped 5.9 percent in April and natural gas prices dropped 19.2 percent. Over the past three months, crude energy prices are down 10.8 percent after jumping 24.5 percent in the previous three months.
“Today's producer price index data supports the proposition that construction materials prices can rise even when the prices of oil and natural gas are falling,” said Associated Builders and Contractors chief economist Anirban Basu. “A number of nonfuel related prices continue to edge higher in April, most notably iron and steel. This seems to be a reflection of an ongoing pattern of construction materials price increases attributable in part to robust levels of economic activity in China and other parts of the emerging world.
There may be more price hikes ahead for contractors, Basu said.
“However, given the global dynamics, other construction materials and supplies may continue to experience rising price levels making the overall cost of construction more expensive at a time when purchasers of construction materials remain particularly price sensitive,” he said.
Construction materials and supplies prices rose 1.1 percent in April, according to figures released Tuesday by the U.S. Labor Department.
Experts with the Associated Builders and Contractors do not expect the trend to stop anytime soon. Construction materials prices have increased for the last six months and are up 5.7 percent compared with the same period last year, the U.S. government said.
Iron and steel jumped 5.1 percent last month and are 37.7 percent higher than April 2009’s figures. Fabricated structural metal products cost 1.1 percent more in April, but are down 1.5 percent compared with last year.
Energy prices are on the decline, however. Crude energy prices dropped 5.9 percent in April and natural gas prices dropped 19.2 percent. Over the past three months, crude energy prices are down 10.8 percent after jumping 24.5 percent in the previous three months.
“Today's producer price index data supports the proposition that construction materials prices can rise even when the prices of oil and natural gas are falling,” said Associated Builders and Contractors chief economist Anirban Basu. “A number of nonfuel related prices continue to edge higher in April, most notably iron and steel. This seems to be a reflection of an ongoing pattern of construction materials price increases attributable in part to robust levels of economic activity in China and other parts of the emerging world.
There may be more price hikes ahead for contractors, Basu said.
“However, given the global dynamics, other construction materials and supplies may continue to experience rising price levels making the overall cost of construction more expensive at a time when purchasers of construction materials remain particularly price sensitive,” he said.
