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Lumber and Concrete Prices Fall in September

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Economics

Lumber and Concrete Prices Fall in September

What the latest PPI report means for construction goods.


October 15, 2021
Lumber is carried through a warehouse.
Image: Stock.adobe.com

September prices for residential construction goods like softwood lumber and ready-mix concrete declined for the second month since the start of the last recession, according to the latest Producer Price Index (PPI) report released by the Bureau of Labor Statistics.

The monthly PPI of most durable goods for a given month is largely dependent on prices paid for goods shipped in the survey month, meaning greater variability for longer lead times.

The PPI for softwood lumber (seasonally adjusted) decreased 3.5% in September after declining 29.0% and 27.7% in July and August, respectively. The slowing of monthly price declines is consistent with cash prices one month earlier, as measured by the Random Lengths Framing Lumber Composite Price (FLCP), as week-over-week declines slowed in August before beginning to increase in September.

The PPI for ready-mix concrete (RMC) decreased 0.5% in September, the first decline since January 2021.  The index for RMC has risen 3.0% over the past 12 months and 4.1% YTD—the largest year-to-date increase in September since 2006.

As Congress continues to work on an infrastructure package, the Construction Materials index is particularly salient.  This index, which has increased 23.9% year-to-date and 32.1% over the past 12 months, is much more heavily weighted with products used in large amounts in the production of “traditional” infrastructure (e.g., roads, bridges, rail).

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