PPI Reports Product Prices Decrease
The Bureau of Labor Statistics released the Producer Price Indexes for February. Inflation in prices received by producers (prior to sales to consumers) declined 0.5 percent in February. The decline was dominated by a decline in prices for services and within services prices for trade, transportation and warehousing. Prices for goods also declined led by falling food prices. Energy prices leveled off in February after declines accelerated through the second half of last year and reached -10.3 percent in January. The story was written by Robert Denk, published on the NAHB’s Web site on March 13.
Among those prices that did increase, gypsum jumped 3.9 percent in February after a 4.3 percent increase in January, reaching an all-time high. Gypsum prices are now 5.4 percent higher than their 2006 housing boom peak while single family housing starts remain depressed at roughly half the normal level of production.
Softwood lumber prices declined 1.6 percent in February. The Random Lengths Framing Lumber Composite Index points to further declines in March. Analysts point to softer than expected U.S. single family construction in 2014, inventory management on the part of distributors, and softening overseas markets as factors. Additional declines will be tempered going forward by possible log shortages and continuing transportation bottlenecks.
Prices for OSB declined 2.9 percent after modest upticks in the prior three months. The return of mothballed capacity since 2013 has supply outpacing demand. Random Lengths indicates additional declines in March. The PPI for OSB indicates a 46 percent decline from the price peak in March 2013.