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Producer Price Index Soars in February

The price index for residential construction generally follows movements in the broader PPI for finished goods and we expect that to continue through 2011.
Courtesy of NAHB

A sharp increase in food and energy prices pushed the Producer Price Index up further in February—its eighth consecutive rise. Producer Price Index indicated that PPI for finished goods jumped 1.6 percent in February, driven by a 3.9 percent increase in finished consumer foods and a 3.3 percent rise in finished energy goods. The index for finished goods less food and energy was up a modest 0.2 percent. Over the past 12 months, the price of finished goods has advanced 5.6 percent.

The price index for inputs into residential construction was up 1 percent in February. This was led by increases in prices of energy intensive products such steel (+4.7 percent), copper (+3.9 percent), insulation materials (+3.5 percent) and asphalt products (roofing and siding 0.6 percent, paving 0.9 percent).

The index also includes petroleum products, #2 diesel fuel (+7.1 percent) and regular gasoline (+2.8 percent). Most other building materials experienced a modest decline—cement (-0.7 percent), gypsum products (-0.7 percent), ceramic tiles (-0.5 percent), brick and clay tiles (-0.4 percent) and lumber (-0.4 percent). Year-over year, the price index for residential construction is up 5.1 percent.

Overall, expect PPI increases to slow substantially through 2011. The spike in oil prices is expected to be short lived, as it is due to uncertainty surrounding the political turmoil in North Africa and the Middle East, rather than prolonged disruption in supply.

– Courtesy of NAHB

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October 17, 2019, 9:25 am PDT

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