The Bureau of Labor Statistics (BLS) released its producer price index report for April 2020. It showed that overall prices for processed goods for intermediate demand fell by 3.7 percent, the fourth monthly drop in a row. Falling energy prices again accounted for much of the decline with a 15.1 percent drop. Excluding food and energy, the price index for processed goods for intermediate demand was down by 1.5 percent for the month. The full index was 7.3 percent lower than its year-ago level.
The BLS price index of materials and components for construction was down 0.3 percent from March, before seasonal adjustment. It was 0.5 percent higher than its year-earlier level.
For reference, the changes in these indices compare with a 0.3 percent rise in the all-items consumer price index (CPI-U) for the 12 months ending in April. The CPI-U fell 0.8 percent in April, the second monthly drop in a row.
Yield Pro (PRO) compiled the BLS reported price changes for our standard list of construction commodities. These are commodities whose prices directly impact the cost of constructing an apartment building. The two right hand columns of the table provide the percent change in the price of the commodity from a year earlier (12 Mo PC Change) and the percent change in price from March 2020 (1 Mo PC Change). If no price data is available for a given commodity, the change is listed as N/A.
| Commodity |
12 Mo PC Change |
1 Mo PC Change |
| Softwood lumber |
-0.7 |
-11.2 |
| Hardwood lumber |
-8.9 |
-1.1 |
| General millworks |
1.6 |
0.3 |
| Soft plywood products |
-9.5 |
3.5 |
| Hot rolled steel bars, plates and structural shapes |
-11.5 |
0.1 |
| Copper wire and cable |
-7.3 |
-1.6 |
| Power wire and cable |
-2.3 |
0.6 |
| Builder’s hardware |
2.2 |
-3 |
| Plumbing fixtures and fittings |
2.2 |
-0.1 |
| Enameled iron and metal sanitary ware |
3.4 |
-0.1 |
| Furnaces and heaters |
3.4 |
2.3 |
| Sheet metal products |
-0.1 |
0 |
| Electrical Lighting fixtures |
7.4 |
0.8 |
| Nails |
0.2 |
0 |
| Major appliances |
0.7 |
0.6 |
| Flat glass |
0.1 |
-0.6 |
| Ready mix concrete |
3.4 |
0.4 |
| Asphalt roofing and siding |
1.9 |
-0.9 |
| Gypsum products |
-2.1 |
-1.2 |
| Mineral wool insulation |
1.2 |
-1.5 |
Lumber prices have been fairly restrained lately after surging two years ago. In this report, the first to cover a time period when COVID-19 was having a significant impact on the economy, it was interesting to see that the price of softwood lumber took a sizable fall while the price of soft plywood products took a sizable jump. We may be in for a few months of price volatility until the full impact of COVID-19 on demand for, and supply of, different construction materials is accounted for in construction material pricing.
The second chart, below, shows the recent history of several other construction material prices which increased rapidly in early to mid-2018. While these prices rose later than did those of lumber and while they did not rise to the same degree as did lumber prices, they also have not fallen back the way lumber prices did. However, they have been relatively stable lately.
Price changes for several of the more finished goods from our sample are illustrated in the final chart, below. Electrical lighting fixtures again showed the largest annual price increase in this report with a rise of 7.4 percent while furnaces and heaters had the largest monthly price increase in this group with a jump of 2.3 percent.
The full BLS report can be found here.
