Materials costs diverge as bid prices stay flat for building contractors, drop for highways
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The producer price index (PPI) for finished goods rose 0.2%, not seasonally adjusted (and fell 0.6%, seasonally adjusted), in March and 1.1% over 12 months, the Bureau of Labor Statistics (BLS) reported today. The PPI for inputs to construction—a weighted average of the cost of all materials used in construction plus items consumed by contractors such as diesel fuel—was unchanged for the month and up 0.9% year-over-year. Indexes for most new nonresidential building construction and subcontractors’ work were similarly flat. The PPIs for new offices, industrial buildings and warehouses were flat in March and rose just 1.0%, 1.1% and 2.3%, respectively, over 12 months. The index for new schools fell 0.4% in March and was up 0.5% from a year ago, and the index for health care buildings was down 0.1% for the month and back to the level of June 2012, when it was introduced. The PPI for new, repair and maintenance work on nonresidential buildings by electrical contractors was stable in March and down 0.5% over 12 months; the index for concrete contractors was level for the month but increased 1.2% from a year ago; the index for roofing contractors fell 0.2% for the month and rose 1.7% over 12 months; and the PPI for plumbing contractors rose 0.3% and 1.6%, respectively. As for input costs, materials used mainly in building construction again rose steeply, reflecting the pickup in residential construction and retail and office renovations. The PPI for gypsum products climbed 0.7% in March and 18% from a year ago; lumber and plywood, 3.7% and 18%; and prepared asphalt and tar roofing and siding products, 0.3% and 8.6%. In contrast, PPIs for fuel and metals tumbled: diesel fuel, -6.0% for the month and -6.7% year-over-year; copper and brass mill shapes, -2.6% and -5.5%; steel mill products, -0.4% and -9.5%; and aluminum mill shapes, -0.1% and -2.7%. The PPI for concrete products rose 0.2% in March and 2.2% for the year, while the index for asphalt paving mixtures and blocks fell 0.1% in March and rose 0.9% over 12 months.
The National Highway Construction Cost Index, a weighted average of accepted bids on all state highway and bridge projects, decreased 1.7% from September to December 2012 after falling 1.3% in the third quarter, the Federal Highway Administration reported on Thursday. The index increased 2.3% from December 2011 to December 2012.
BLS reported on Wednesday that 303 metropolitan areas had year-over-year increases in nonfarm payroll employment, 58 had decreases and 11 had no change. An AGC analysis released on Tuesday showed that of the 339 metro areas (including divisions of larger metros) for which BLS reports construction employment, 158 had increases, 132 had decreases and 49 were stagnant. (BLS combines mining and logging with construction in most metros to avoid disclosing data about industries with few employees. Metro data is not seasonally adjusted.) Pascagoula, Miss. again added the highest percentage of new construction jobs (51%, 1,800 combined jobs), followed by El Centro, Calif. (23%, 300 combined jobs) and Anchorage, Alaska (22%, 1,800 construction jobs). Houston-Sugar Land-Baytown added the most jobs (13,200 construction jobs, 8%), followed by the Dallas-Plano-Irving division (10,700 combined jobs, 10%) and the Los Angeles-Long Beach-Glendale division (8,500 construction jobs, 8%). The largest job losses were in Northern Va. (-3,100 combined jobs, -5%), Cincinnati-Middletown, Ohio-Ky.-Ind. (-2,400 combined jobs, -7%) and Raleigh-Cary, N.C. (-2,300 combined jobs, -8%). Monroe, Mich. lost the highest percentage (-22%, -1,800 combined jobs), followed by Atlantic City-Hammonton, N.J. (-20%, -1,000 combined jobs) and Rockford, Ill. (-18%, -700 combined jobs).
Although health care construction spending slipped 1.1% in the first two months of 2013 compared with the same period in 2012, according to Census Bureau data released on April 1, there are areas of growth. “The North Texas division of hospital giant HCA and Lewisville [Texas]-based First Choice Emergency Room, which operates free-standing emergency care facilities, [are] in the midst of major expansions here,” the Dallas Morning News reported on March 22. “First Choice, which opened its first emergency room in Flower Mound in 2002, now operates five in the Dallas-Fort Worth area and 17 overall. ‘We expect to more than double that total over the next 12 to 18 months, including six to eight new sites in D-FW,’ First Choice president and CEO Thomas Hall said in an interview Friday. The typical facility runs 6,000 to 7,000 square feet in size and costs $4 million to $5 million, he said. James Scoggin Jr., president of HCA’s North Texas Division, said his company has four free-standing emergency departments under construction or about to be under construction in the area. Scoggin said HCA has ‘well in excess of $300 million’ worth of hospital expansions and other projects under way here, with more planned. Stand-alone emergency departments are one of the fastest-growing segments of the medical industry. Last May, Baylor Health Care System and The Woodlands-based Emerus created a joint venture to build and operate emergency hospitals here under the Baylor name. One is open in Aubrey, and five are in development, a Baylor spokeswoman said. Other big providers — Texas Health Resources and Methodist Health System — also have stand-alone emergency facilities.”
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