The cost of building materials has escalated in the United States


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The increase in input cost is migrating beyond wood at the same time that the depth of the non-residential construction market in the United States is becoming shallower, meaning that there are fewer projects offered for bidding due to the cuts in capital spending plans imposed by the Coronavirus contagion, and the costs of material inputs Escalation was done. Table 1 shows the extent of the cost shock. The table pulls its information from the monthly PPI series published by the Bureau of Labor Statistics. Supported by home resident renovation projects and aggressively in one of the few corners of the construction market that has remained bullish, single-family residential activity, timber and related product prices have risen. In February, the softwood PPI was + 79.7% year over year and + 38.0% over the last three months. Plywood, + 44.1% annually and + 8.1% during the last three months; And particle boards and oriented strand plates, + 62.5% yr / yr, despite only + 1.9% in the last three months. While forest products have begun to wave, significant price increases have recently moved into many other classes of materials as well. From Table 1, the prices of steel bars, sheets and structural form are + 15.2% year over year after climbing + 16.2% in the last three months. Scrap iron and steel prices increased by 45.7% year-on-year and 36.1% over the last three months. Copper wire and cable prices increased + 18.2% year-on-year and + 10.7% in the last three months. Diesel fuel is + 36.5% year-on-year and + 31.4% compared to three months earlier. Adding to the upward trajectory of material costs, as recorded in the last three months, aluminum plant forms, + 7.5%; Asphalt + 34.0%; And regular unleaded gasoline is 39.1%. Price increases for products derived from fossil fuels are caused by a rise in international oil prices, to around $ 60 per barrel. (There was a brief moment in 2020 when the price of crude oil fell below zero dollars a barrel.) Table 1: US Building Material Cost Changes from the PPI Series – February 2021 Data source: BLS Charts: ConstructConnect. Five charts covering 20 entries of building materials, the following five charts (each with a set of four graphs) show the monthly dates of the major PPIs since January 2000. Chart 1 focuses primarily on wood products, with gypsum (as the inner wall covering) included. Also. Chart 2 deals with steel, in addition to prefab metal buildings that are not mentioned in the first section, but have recorded significant price increases recently (+ 18.4% year over year and + 9.6% in the last three months). Diagram 3 switches on cement and concrete. You will notice that the price increases for these products are moving in a more stable and less volatile manner compared to most other chains. Figure 4 looks at the basic materials: iron ore, coal, aluminum, and copper. Coal is the only commodity covered in this story with an annual (albeit minimal) drop in price, -0.1%. Diagram 5 is about fossil fuel derivatives that are either incorporated into construction projects or consumed in building structures. Chart 1: Building Material Costs in the United States (1) – From the PPI series latest data point for February 2021. Data source: US Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, unadjusted Seasonally (NSA) Charts: ConstructConnect. Chart 2: US Building Material Costs (2) – From the PPI series latest data point for February 2021. Data source: US Bureau of Labor Statistics (BLS), PPI Series, No Seasonally Modified (NSA) Charts: ConstructConnect. Chart 3: US Building Material Costs (3) – From the PPI series latest data point for February 2021. Data source: US Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, no seasonally adjusted ( NSA) Charts: ConstructConnect. Graph 4: US Building Material Costs (4) – From the PPI series latest data point for February 2021. Data source: US Bureau of Labor Statistics (BLS), Producer Price Index (PPI) series, No Seasonally Modified (NSA) Charts: ConstructConnect. Graph 5: US Building Material Costs (5) – From the PPI series latest data point for February 2021. Data source: US Bureau of Labor Statistics (BLS), PPI Series, No Seasonally Modified (NSA) Charts: ConstructConnect. However, the Bid Price Index remains muted. Table 1 at the beginning of this article is an abbreviated version of Table 2 below. Table 2 shows the cost changes for a much longer list of building material inputs (i.e. 35 products and services or two), across five different time frames. The “Final Demand” PPI is located on the top line of Table 2. It reflects what owners see when reviewing bid prices. The “building final demand” indicator includes more than just material costs, adding labor, and all other expenses and (profit) margins to the mix as well. The final demand index is only + 1.0% on an annualized basis. This is in stark contrast to the “new construction input” indicators at the bottom of Table 2, which fluctuate around + 10.0% year over year. For now, at least, contractors appear to be willing to absorb the higher costs of winning contracts. Table 2: United States Producer Price Index (PPI) Results The percentage change in February 2021 index from: 3 years 1 year 6 months 3 months ago a month ago Final demand / service / goods / energy / input: building final demand 10.1% 1.0% 0.4% 0.5% 0.3% New warehouse construction 7.7% -0.6% 0.2% -0.1% -0.2% Construction of a new school building 11.0% 0.9% -0.2% 0.2% 0.3% Construction of new office buildings 10.9% 1.7% 1.3% 1.0% 0.5% New industrial construction 12.2% 1.8% 0.1% 0.6% 0.1% Construction of new healthcare buildings 8.7% 0.3% -0.5% 0.2% 0.3% Architectural and engineering services 5.0% 1.4% 2.5% 2.3% 0.7% Construction of machinery and equipment 9.8% 1.3% 1.3% 1.2% 0.1% Asphalt 13.6% 1.4% 20.2% 34.0% 22.4% Plastic building products 10.7% 8.0% 6.5% 2.1% 1.1% Softwood 65.6% 79.7% 30.3% 38.0% 7.9% Wood lumber 3.2% 16.9% 16.2% 8.4% 2.5% Handicraft 16.0% 11.0% 6.8% 3.7% 0.3% Plywood 24.2% 44.1% 11.3% 8.1% 7.2% Particleboard and Oriented Board (OSB) 55.4% 62.5% 15.5% 1.9% 2.2% Gypsum – 4.0% 5.1% 7.3% 3.1% 0.3% insulating materials 6.8% 5.4% 6.3% 4.2% 2.2% construction sand, gravel, wa For crushed stones 13.1% 3.9% 2.2% 2.5% -0.1% cement 6.0% 3.0% 0.6% 0.6% 0.2% precast concrete 7.1% 0.8% 0.6% 1.6% 0.3% precast concrete products 13.8% 4.1% 3.5% 2.4% 1.0% Prestressed concrete products 6.5% 0.0% 0.7% 0.7% -0.1% (clay) 6.3% 3.4% 1.5% 0.5% 0.1% coal -4.6% -0.1% 1.2% -1.7% -0.2% iron ore 25.3% 5.7% 3.6% 1.7% 0.0% Iron and Steel Scrap 13.1% 45.7% 54.4% 36.1% -10.3% Steel Rods, Plates and Forms 16.0% 15.2% 18.2% 16.2% 9.9% Steel Pipes and Tubes 21.9% 10.1% 14.6% 10.3% 6.8% Structural Metal Products Manufactured 13.2% 6.2% 6.0% 5.9% 3.3% Prefab Metal Buildings 23.9% 18.4% 17.1% 9.6% 5.4% Aluminum Factory Forms 0.8% 3.9% 11.1% 7.5% 0.1% Flat Glass 4.9% 1.9% 2.1% 1.9% -0.1% Architectural Paints Coatings 13.7% 2.4% 0.0% 0.0% -0.1% Lighting fixtures 9.6% 1.3% 0.9% 0.3% 0.2% Plumbing fixtures and fittings 7.9% 1.3% 1.5% 0.3% 0.4% Elevators and escalators 8.5% 1.5% 1.6% 1.3% 1.5% heating equipment 11.9% 2.5% 1.7% 1.9% 1.7% air conditioning equipment 11.7% 4.6% 2.8% 2.0% 1.1% copper wire and cable 14.4% 18.2 13.4% 10.7% 2.2% regular unleaded gasoline -9.2% 4.1% 30.7% 39.1% 9.2% diesel fuel 16.5% 36.5% 38.2% 31.4% 12.7% new construction input 14.1% 10.0% 7.3% 5.5% 2.5% construction input New residential 14.8% 11.2% 7.0% 4.9% 3.0% Residential construction 13.3% 8.6% 7.5% 6.2% 1.9% Commercial building inputs 12.9% 7.9% 7.2% 5.8% 1.6% Healthcare structures input 13.4% 8.7% 7.0% 5.6% 1.6% Inputs to industrial structures 13.5% 7.4% 7.0% 5.5% 1.5% Inputs to highways and streets 10.8% 6.0% 6.8% 6.2% 1.7% Inputs to energy and communication structures 11.5% 8.0% 7.6% 6.4% 2.0% Professional and professional structures 14.4% 9.5% 7.2% 5.6% 1.7% Building materials (PPI ‘Special Index’) 15.3% 12.4% 9.4% 7.9% 3.5% The ‘Final Demand’ indicators (top) reflect the prices that owners pay for building projects. It includes materials, labor and profits. The “service”, “goods” and “energy” indicators (in the middle section of the table) are based on “factory gate” sales prices. The ‘Inputs’ indicators (below) reflect the costs that contractors face. It excludes capital investment (i.e. machinery and equipment), labor and imports. The “input” indicators are generated from the “service” (design, legal, transport and storage, etc.) the “commodity” and “energy” indicators. Data source: Bureau of Labor Statistics (BLS) Product Price Index (PPI) series Table: ConstructConnect.


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