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Construction Materials Trends & Outlook

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Ken Simonson, Chief Economist AGC of America gives with his weekly presentation of Construction Materials Trends & Outlook. February 23, 2009

Ken Simonson, Chief Economist AGC of America gives with his weekly presentation of Construction Materials Trends & Outlook. February 23, 2009

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  • 1. Construction Materials Trends & Outlook Ken Simonson, Chief Economist AGC of America [email_address] Revised February 23, 2009
  • 2. Materials and components Source: BLS (CPI, PPI)
    • Higher increases for construction inputs than for overall economy:
    • Cumulative change double the CPI since 12/03:
      • Const PPI: 32%
      • CPI-U: 15%
    • Producer price index drivers: steel, gypsum, diesel, asphalt, concrete, copper, plastics, aluminum, wood
  • 3. Change in Producer Prices for Construction vs. Consumer Prices, 2003 - 2009 (December 2003 = 100) Source: BLS (CPI, PPI) Jan. 2009
  • 4. Producer Price Indexes, 2007 - 2009 Inputs to construction industries Change from 1/08-1/09: 1.8% Highway & street construction Change from 1/08-1/09: -1.4% Nonresidential buildings Change from 1/08-1/09: 1.2% Source: BLS
  • 5. Producer Price Indexes, 2007 - 2009 No. 2 Diesel Fuel Change from 1/08-1/09: -41.0% Steel Mill Products Change from 1/08-1/09: -2.2% Asphalt Paving Mixtures & Blocks Change from 1/08-1/09: 23.1% Source: BLS
  • 6. Producer Price Indexes, 2007 - 2009 Gypsum Products Change from 1/08-1/09: 8.7% Lumber and Plywood Change from 1/08-1/09: -7.3% Concrete Products Change from 1/08-1/09: 5.0% Copper & Brass Mill Shapes Change from 1/08-1/09: -28.7%
  • 7. Outlook for materials in ‘09 compared to ‘08
    • Lower average prices: diesel, asphalt, steel
    • Possible increases: concrete, gypsum, copper, wood products
    • Year-over-year PPI change: -4% to 0%
    Source: Author’s forecasts
  • 8. Outlook for materials (beyond 2009)
    • Industry depends on specific materials that:
      • are in demand worldwide
      • have erratic supply growth
      • are heavy, bulky or hard to transport
    • Construction requires physical delivery
    • Thus, industry is subject to price spurts, transport bottlenecks, fuel price swings
    • Expect 6 to 8% PPI increases, higher spikes
    Source: Author’s forecast
  • 9. AGC economic resources (sign up by email to simonsonk@agc.org)
    • The Data DIGest: weekly one-page email
    • PPI tables: emailed monthly
    • State-specific stimulus estimates and fact sheets: www.agc.org/stimulus
    • Webinars/Audioconferences