April 2009:Construction Materials Price History & Outlook

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April 2009 Construction Materials Price History and Outlook from Ken Simonson, Chief Economist AGC of America

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April 2009:Construction Materials Price History & Outlook

  1. 1. Construction Materials Price History and Outlook April 20, 2009 Ken Simonson, Chief Economist AGC of America [email_address]
  2. 2. Change in Producer Prices for Construction vs. Consumer Prices, 2003 - 2009 (December 2003 = 100) Source: BLS (CPI, PPI) Mar. 2009
  3. 3. Producer Price Indexes, 2007 - 2009 Inputs to construction industries Highway & street construction Nonresidential buildings Other heavy construction 1-month: -0.6% 12-month: -1.9% 1-month: -0.9% 12-month: -7.0% 1-month: -0.8% 12-month: -5.8% 1-month: -0.6% 12-month: -2.6%
  4. 4. Producer Price Indexes, 2007 - 2009 No. 2 Diesel Fuel Steel Mill Products Concrete Products Asphalt Paving Mixtures & Blocks 1-month: -8.9% 12-month: -62.5% 1-month: -0.1% 12-month: -14.6% 1-month: -1.9% 12-month: 17.4% 1-month: -0.9% 12-month: 3.6%
  5. 5. Producer Price Indexes, 2007 - 2009 Copper & Brass Mill Shapes Aluminum Mill Shapes Lumber and Plywood Gypsum Products 1-month: -0.8% 12-month: -37.0% 1-month: -2.9% 12-month: -22.3% 1-month: 0.0% 12-month: 9.0% 1-month: -2.5% 12-month: -9.6%
  6. 6. Outlook for materials in ‘09 compared to ‘08 <ul><li>Lower average prices: diesel, asphalt, steel </li></ul><ul><li>Possible increases: concrete, gypsum, copper, wood products </li></ul><ul><li>Year-over-year PPI change: -4% to 0% </li></ul>Source: Author’s forecasts
  7. 7. Outlook for materials (beyond 2009) <ul><li>Industry depends on specific materials that: </li></ul><ul><ul><li>are in demand worldwide </li></ul></ul><ul><ul><li>have erratic supply growth </li></ul></ul><ul><ul><li>are heavy, bulky or hard to transport </li></ul></ul><ul><li>Construction requires physical delivery </li></ul><ul><li>Thus, industry is subject to price spurts, transport bottlenecks, fuel price swings </li></ul><ul><li>Expect 6 to 8% PPI increases, higher spikes </li></ul>Source: Author’s forecast
  8. 8. AGC economic resources (sign up by email to simonsonk@agc.org) <ul><li>The Data DIGest: weekly one-page email </li></ul><ul><li>PPI tables: emailed monthly </li></ul><ul><li>State-specific stimulus estimates and fact sheets: www.agc.org/stimulus </li></ul><ul><li>Webinars/audioconferences </li></ul><ul><li>Member emails on stimulus jobs, credit market </li></ul>
  9. 9. Ken Simonson Chief Economist Associated General Contractors of America simonsonk@agc.org, 703-837-5313 www.agc.org

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