Newsline

Producer Prices Drop but Inflation Relief Is Still Threatened

October 30, 2006
/ Print / Reprints /
ShareMore
/ Text Size+
WASHINGTON - "Inflation took a vacation in September for most of the economy but remains a problem for construction materials," said Ken Simonson, chief economist for The Associated General Contractors of America (AGC). Simonson was commenting on the Oct. 17 producer price index (PPI) report from the Bureau of Labor Statistics.

"Plunging petroleum prices drove down the overall producer price index and moderated the increase in the PPI for construction materials and components," Simonson commented. "The PPI for finished goods plunged 1.1 percent for the month, before seasonal adjustment, and was up only 0.9 percent compared to September 2005. But the PPI for construction materials and components rose 0.3 percent, the same as in August, and had a year-over-year increase of 8.1 percent, nine times as much as the overall index."

Home heating oil dropped in price as the index for commercial natural gas rose 3 percent in September, compared with a 1.8 percent gain in August.

"The 12-month increase for most construction inputs was milder than in the August report but still hard for contractors to either absorb or pass on," Simonson observed. "For instance, the PPI for copper and brass mill shapes soared 75 percent from September 2005 to September 2006. Other large gains included asphalt paving mixtures and blocks, 33 percent; steel mill products, 23 percent; gypsum and plastic construction products, 19 percent each; aluminum mill shapes, 14 percent; and concrete products, 9.3 percent.

As hurricane season winds down, however, contractors are primed for relief. "I expect contractors to get good news for the next few months relative to the artificially high post-hurricane prices of last autumn," he said. "At the moment, falling diesel prices are helping contractors," Simonson concluded. "But I expect construction materials costs over the next year to rise at least 6-8 percent, versus 2-4 percent for the overall economy."

For more information, or to listen to free pod casts, go to www.agc.org.

Publication date: 10/30/2006

Did you enjoy this article? Click here to subscribe to The NEWS Magazine

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

2014 MCAA Annual Convention

Scenes from the 2014 MCAA Annual Convention in Scottsdale, Ariz.

Podcasts

NEWSmakers: Julian Scadden

Training is an ongoing process. Julian will discuss how you can generate maximum return on time and energy invested training by following a three part process. Listen to this podcast to get expert tips on training, tracking and follow up. 

More Podcasts

THE MAGAZINE

ACHRNEWS

NEWS 04-14-14 cover

2014 April 14

Check out the weekly edition of The NEWS today!

Table Of Contents Subscribe

SERVICE CALLS POLL

Which statement on service calls best applies to your business?
View Results Poll Archive

HVACR INDUSTRY STORE

plumbing-hvac.gif
2014 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

 

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications, Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

DON'T MISS A THING

Magazine image
 
Register today for complete access to ACHRNews.com. Get full access to the latest features, Extra Edition, and more.

STAY CONNECTED

facebook icontwitter iconyoutube iconLinkedIn i con