Building Materials Prices Update With Latest Release by U.S. Bureau of Labor Statistics

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According to the most recent Producer Price Index (PPI) report published by the U.S. Bureau of Labor Statistics, prices for inputs to new residential construction—excluding capital investment, labor, and imports—were up 0.5% in February. This was while the increase in January was revised downward to 1.1%. The Producer Price Index measures prices that domestic producers receive for their goods and services, differing from the Consumer Price Index, which measures what consumers pay and includes both domestic products as well as imports.

According to Eye On Housing, The inputs to the New Residential Construction Price Index grew 0.7% from February of last year. The index can be broken into two components—the goods component increased 1.2% over the year, while services decreased 0.1%. For comparison, the total final demand index, which measures all goods and services across the economy, increased 3.2% over the year, with final demand with respect to goods up 1.7% and final demand for services up 3.9% over the year.

The goods component has a larger importance to the total residential construction inputs price index, representing around 60%. For the month, the price of input goods to new residential construction was up 0.6% in February.

The input goods to residential construction index can be further broken down into two separate components, one measuring energy inputs with the other measuring goods less energy inputs. The latter of these two components simply represents building materials used in residential construction, which makes up around 93% of the goods index.

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