Construction materials prices continued to move downward in July, falling 0.6 percent, according to the Aug. 18 producer price index (PPI) report by the U.S. Department of Labor.  Construction materials prices are now 8.6 percent lower than July 2008.  

“To even the most seasoned economist, the producer price index data for July are a source of major perplexity,” said ABC Chief Economist Anirban Basu. “A variety of factors suggest that producer prices should now be stabilizing worldwide, but that is just not the case.  

“Despite growth in Asia, Europe and North America, and the implementation of major stimulus packages underway in various parts of the world – including most notably in China and the U.S. – construction materials prices continue to trend downward,” Basu said.  

Prices for fabricated structural metal products fell for the 10th straight month, down 1 percent from July and 6.9 percent lower than last July.  Nonferrous wire and cable producer prices decreased by 0.8 percent in July and are down 16.9 percent year-over-year.  Prices for prepared asphalt and tar roofing and siding products decreased 1.6 percent from last month but are still up 23.5 percent from July 2008.   

Softwood lumber prices jumped 6.7 percent in July but are down 10.1 percent on a year-over-year basis.  Plumbing fixtures and fittings prices remain unchanged on a monthly basis and are up just 0.5 percent from a year ago.  

“The fact that producer prices are still falling is a reflection that the global economy remains fragile,” Basu noted. “It is also a reflection of the notion that recovery is unlikely to be brisk, including in the U.S.  The expectation remains that, at some point in the not too distant future, producer prices will stabilize and begin to rise in accordance with historical patterns.  

“The U.S. recession is now either over or ending, and growing concern regarding future inflation will likely contribute to stable or rising producers prices,” Basu concluded.  

Crude energy prices decreased 6.2 percent last month, led by a 15.9 percent decrease in crude petroleum prices.  Finished energy goods prices fell 2.4 percent in July as gasoline prices dropped 10.2 percent for the month.  Overall, wholesale prices inched downward 0.9 percent in July following two consecutive months of increases.   

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