Softwood Lumber Leads Building Material Volatility
Originally Published by: HBS Dealer — August 11, 2023
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The Producer Price Index advanced 0.3 percent in July, on a seasonally adjusted basis, generating a year-over-year 0.8 percent rise.
Softwood lumber once again was among the most volatile, down 17.3 percent from a year ago. While that deflation is significant, the figure was down 40.4 percent for the 12 months ended in May. The PPI for softwood lumber gained 8.6 percent from June to July, as the chart below reveals.
According to analysis of the data from the Associated Builders and Contractors, construction input prices were unchanged in July relative to the previous month.
Overall construction input prices are 3.1% lower than a year ago, while nonresidential construction input prices are 2.7% lower. However, prices increased in all three energy subcategories. Natural gas prices were up 11.0% in July, while crude petroleum and unprocessed energy materials prices increased 8.4% and 8.0%, respectively.
“Goods prices continue to stagnate in the context of improved supply chains and a sluggish global economy,” said ABC Chief Economist Anirban Basu. “It has been the improvement of supply chains that best explains recent positive economic outcomes in the U.S. economy. As supply chains have normalized, unmet demand has been more readily satisfied. That has propelled transactional volume and economic growth. At the same time, the improved supply chain has helped push prices lower, contributing to the disinflation.”
Click here for the Bureau of Labor Statistics PPI page.