Construction materials prices continued their downward slide for the second month in a row, falling 3.5 percent in November, according to a Dec. 12 producer price index (PPI) report by the U.S. Department of Labor.  This represents the largest one-month decrease in more than 22 years, exceeding a 2.8 percent decline in October.  Despite the drop, construction input prices are still up 4.9 percent compared to November 2007.  

“Monthly declines in construction materials prices are now accelerating, consistent with the trajectory of commodity prices and the performance of the global construction economy,” according to ABC Chief Economist Anirban Basu. “For the first time in 2008, every commodity monitored by ABC posted monthly declines, likely due to a combination of lack of demand and falling oil prices.”  

Prices for fabricated structural metal products dropped 0.9 percent, marking the largest monthly decline since 1957, but were up 13.8 percent compared to last year.  Plumbing fixtures and fittings prices dropped 0.6 percent in November but are up 3.5 percent from last year.  Nonferrous wire and cable prices fell 10.8 percent on a month basis and are down 13.1 percent compared to last year – the largest year-over-year decline since 1998.  Prices for fabricated ferrous wire products decreased 2.3 percent in November compared to a 2 percent increase in October, marking a 27.2 percent increase compared to November 2007.  Softwood lumber prices decreased 2.6 percent since October and are down 7.8 percent from one year ago.  Asphalt felts and coatings prices dropped 1.5 percent after increasing for eight consecutive months.  

“While these price declines will not be sufficient in the near term to generate substantial nonresidential construction momentum, they do set the stage for future recovery which may be brisk,” said Basu.  

“The decline in input prices also makes it more palatable for the incoming Obama administration to forge ahead next year with an infrastructure-based stimulus package, since each dollar of stimulus spending will now be associated with greater corresponding infrastructure formation,” Basu noted.  “In other words, the administration will be able to purchase more infrastructure for each dollar spent.  

“But, in the near term, the bad news has not ended.  It is more likely than not that input prices will continue to decline in the months ahead.  This is both a reflection of earlier commodity price declines and prevailing economic weakness,” Basu said.  

Crude energy prices continued to post major declines, down 18.7 percent in November after falling 24.9 percent in October.  Crude petroleum continued to lead the way dropping 30.2 percent in November.  Overall, wholesale prices fell for the fourth straight month, down 2.2 percent in November.  

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