Construction Material Prices Jump 2 Percent in March

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Construction Material Prices Jump 2 Percent in March

Construction material prices had the largest monthly increase since July, 2008.  Oil prices rose 14.8% in the month of March.  Iron and steel prices also rose steeply during the month.  According to the Associated Builders & Contractors’ economist, construction materials rose 4 percent over the past three months.  Construction materials rose 6.9% over the past 12 months.

Steel mill products rose 5.8 percent in March.  Over the past three months, steel mill prices have risen 12.4%.  The prices of iron and steel increased 2.8 percent in March and 10.6% for the quarter.  These price increases don’t really make sense in a time of low demand.  For example, the prices for fabricated structural metal products only rose 0.8% in March and only 2.9% for the past three months.  Prices for plumbing fixtures and fittings increased only 0.4% for the past three months.

Oil prices have risen steeply, but the prices for asphalt, tar roofing and siding slipped 0.4% for the month, and were only 0.3% higher than 3 months ago.  We would have thought that asphalt would rise steeply with the price of oil.  Natural gas prices dropped by 11.7% which went counter to the 5.7 increase in crude petroleum prices.  Wholesale finished goods prices rose 0.7 percent higher for the month, and were up 3.1% for the quarter.

According to the ABC Economists, these commodity prices come as little surprise because the value of the US dollar has slipped 8.3% over the past 9 months.  This may be a natural consequence when we print more and more money making the dollar in your pocket less valuable.  As a nation, we are very slowly pulling out of a deep recession even as the world expands at an above-average rate which means there is more pressure to raise prices of commodities.

On the other hand, and there is always another hand with economists, they observe that commodity prices have been falling just recently.  This may be a sign that commodity prices were pushed to artificially high levels by speculators creating a “mini-bubble’.  Oil prices are expected to drop to the $85 or $95 per barrel level sometime later this summer for this reason.  According to the ABC economists, prices of other commodities are expected to drop slightly which would help support some kind of recovery in the US private nonresidential construction industry.

By | 2011-04-16T02:13:41+00:00 April 16th, 2011|Surety Blog|Comments Off on Construction Material Prices Jump 2 Percent in March

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