Construction job and spending cuts remain deep and wide, with credit scarce

The producer price index for finished goods rose 1.2 percent in January, not seasonally adjusted (1.4 percent, seasonally adjusted), and 4.6 percent over 12 months, the Bureau of Labor Statistics reported on Thursday [Feb. 18]. The PPI for material and supply inputs to construction industries, a weighted average of all materials used in every type of project plus
items consumed by contractors, rose 1.3 percent for the month and 1.6 percent over 12 months. The large one-month rise was driven by increases in PPIs for diesel fuel, 11.5 percent and 41 percent, respectively; copper and brass mill shapes, 5.2 percent and 55 percent; aluminum mill shapes, 3.2 percent and 4.1 percent; steel mill products, 2.0 percent and -3.7 percent; asphalt paving mixtures and blocks, 1.9 percent and -4.1 percent; and lumber and plywood, 0.2 percent and 3.5 percent. Prices fell in January for gypsum products, -1.2 percent and -12 percent; concrete products, -0.7 percent and -3.2 percent; plastic construction products, -0.4 percent and -0.6 percent; and construction machinery and equipment, -0.1 percent and 0.1 percent. Rising materials costs added to the squeeze on contractors, as PPIs for finished buildings (which include contractors’ overhead and profit) and subcontractors generally fell: new offices, -0.4 percent and -4.7 percent; warehouses, -0.1 percent and -5.8 percent; industrial buildings, -0.1 percent and -5.6 percent; schools, 0.6 percent and -1.7 percent; roofing contractors, -0.7 percent and -1.5 percent; electrical
contractors, -0.1 percent and -3.7 percent; concrete contractors, 0.2 percent and -1.8 percent; and plumbing contractors, 1.0 percent and 0.5 percent, according to a Feb. 23 Data DIGest report.