Softwood Lumber Displays Volatility

The Producer Price Index for final demand increased 0.5 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported on Friday.

The individual readings for commodities with a bearing on the hardware and building supply industry were all over the board, with softwood lumber showing the most volatility. Here are the numbers:

Analysis from the Associated Builders and Contractors, a D.C.-based industry group, revealed construction input prices increased 0.7 percent in January compared to December. And overall construction input prices are 2.3% higher than a year ago.

“Nonresidential construction input prices rebounded in January, surging at a blistering 7.1% annualized rate for the month,” said ABC Chief Economist Anirban Basu. “While this sharp monthly rise can be traced to significant increases in prices for tariff-affected products like copper wire and cable, iron and steel, and industrial controls equipment, aggregate input price escalation is not particularly concerning right now. Nonresidential materials prices are up just 2.9% over the past year and have been virtually flat over the past several months, rising just 0.2% since September despite some large monthly fluctuations.

“Trade policy may continue to put upward pressure on certain input prices, especially those subject to the large Section 232 tariffs,” said Basu. “Even so, input escalation is unlikely to rise too sharply as long as energy prices remain tame and demand remains subdued.”