AGC, (Associated General Contractors of America) report. Producer price indexes drop while consumer price indexes are mixed
By Kevin Doyle
The producer price index (PPI) for inputs to construction industries dropped 0.6% for the month and edged up 0.5% over 12 months. Materials prices fell for the most part —steeply in some cases. The PPI for diesel fuel plunged 11% and 49%; steel mill products, -6.1% and -9.8%; aluminum mill shapes, -4.2% and -16%; copper and brass mill shapes, -1.8% and -34%; lumber and plywood, -0.8% and -7.1%.
Items that partly reversed previous run-ups include asphalt paving mixtures and blocks, down 1.1% for the month but still 20% higher than in February 2008; gypsum products, -1.1% and 7.8%; concrete products, -0.1% and 4.8%; and plastic construction products, -0.1% and 3.4%.
PPIs for inputs to construction types all fell for the month but varied over the 12-month span: highway and street construction inputs, -0.5% and -2.5%; other heavy construction, -1.5% and -2.4%; nonresidential buildings, -0.7% and -0.1%; multi-unit residential, -0.6% and 1.1%; and single-unit, -0.3% and 3.1%.
The consumer price index (CPI) for urban wage earners and clerical workers (CPI-W), used to adjust many labor contracts in construction and other industries, fell 0.3% over 12 months.
The value of new construction starts in February slumped 8% at a seasonally adjusted annual rate (SAAR), McGraw-Hill Construction (MHC) reported on Monday, based on its own data compilation. Nonresidential building and non-building construction each tumbled 13%. Residential building increased 9%, with single-family up 7% and multifamily up 16% “after a depressed January.”
For the first two months of 2009 combined, starts were down 45% from the same months of last year, although last year’s numbers were swelled by “five exceptionally large projects” totaling $12 billion. MHC, like Reed Construction Data, counts the full value of new projects in the month they start, which can make monthly or year-over-year comparisons tricky.
In contrast, the Census Bureau reports “spending put in place”— an estimate of spending in a given month on projects underway. Even aside from these huge projects, MHC said “nonresidential building for the first two months of 2009 would be down 35% from a year ago, while total construction would be down 37%.” The total was dragged down by residential building, -55% year-to-date, and nonbuilding construction, -13%.
Consistent with MHC’s residential figures, Census reported on Tuesday that the number of housing units started in February rose 22% (SAAR), with single-family up 1% and multifamily up 82% after several very weak months. Compared to a year ago, single-family starts fell 51% and multifamily, -41%. Building permits, a reliable predictor of near-term starts, rose 3% overall (SAAR) for the month, with single-family permits up 11% but multifamily down 11%. Compared to a year ago, the number of permits shriveled 44%: -42% for single-family, -48% for multifamily.
Construction employment fell in January in 36 states, was unchanged (or within 100 of prior levels) in 10 plus D.C., and rose only in Michigan, Indiana, Louisiana and Mississippi.
Ken Simonson is Chief Economist for the Associated General Contractors of America