Social Media

Connect with us!
Connect with PM on Facebook, Twitter and YouTube

PPI, CPI flatten; cement price, supply problems remain; factory, hotel markets improve
July 18

July 18, 2005
/ Print / Reprints /
ShareMore
/ Text Size+
The producer price index (PPI) for finished goods was unchanged for the month of June, seasonally adjusted, and up 3.6% over the past 12 months, the Bureau of Labor Statistics (BLS) reported on Friday. The “core” index, which omits food and energy prices, rose just 2.2% over the year. BLS commented, “Subsequent to a 0.2% decline in May, prices for materials and components for construction climbed 0.3% in June [and 5.1% over 12 months]. Accounting for more than half of this upturn, the index for softwood lumber increased 3.9%, after falling 5.7% in the previous month. Prices for plywood, building paper and board, nonferrous wire and cable, and wiring devices also rose in June, following decreases in the prior month. The treated wood index went up more than it did in May. By contrast, prices for plastic construction products declined 0.7% in June, after increasing 0.6% in the preceding month. The indexes for paving mixtures and blocks, concrete products, and hardwood lumber also turned down in June, while prices for steel mill products fell more than they did in May.” The largest price increases in construction inputs over the past 12 months have been for diesel fuel, 64%; copper and brass mill shapes, 15%; gypsum products, 13%; and cement, 12%.

Cement shortages continue to be a concern. The U.S. Geological Survey reported on Friday that imports increased 28% in January-April 2005 compared to the same months of 2004, while U.S. production slipped 1%. Consumption rose 5%. In the 10 days, Governors Perry (Texas) and Bush (Florida) have written to Commerce Secretary Gutierrez, seeking his help in getting the Southern Tier Cement Committee (STCC) to agree to allow more Mexican cement into the U.S. without anti-dumping duties. AGC CEO Stephen Sandherr followed up on an earlier letter to Gutierrez by writing directly to the STCC. U.S. reliance on imports is increasing. The Portland Cement Assn. and AGC have separately received reports of shortages in part or all of 28 states plus the District of Columbia, up from 23 states in May.

The consumer price index for all urban consumers (CPI-U) was unchanged in June, seasonally adjusted, and rose 2.5% for the year ending in June, BLS reported on Thursday. The core CPI rose 2% over the 12-month span. The CPI for urban wage earners and clerical workers (CPI-W), which is used to adjust many labor contracts in construction and other industries, rose 2.6% over 12 months. Real (net of inflation) average weekly earnings for production or nonsupervisory workers on private nonfarm payrolls, an indicator of consumer buying power, rose 0.4% in the year ending in June. The increase reflected a 2.7% increase in average hourly earnings and a 0.3% increase in average weekly hours, offset by the 2.6% rise in the CPI-W. Average hourly earnings in construction rose 1.3% over the year to $19.37, not seasonally adjusted, 21% higher than the all-industry average, but down 1.3% in real terms from June 2004.

Industrial production at mines, utilities, and factories rose 0.9% in June, seasonally adjusted, the Federal Reserve reported on Friday. Widespread hot weather pushed the utility component up 5.3%. The factory component rose 0.4% for the month and 3.8% over the past 12 months. The Fed noted, “The index for construction supplies fell 0.4% in June but rose at an annual rate of 2.9% in the second quarter.” The index was 2.5% higher than in June 2004. Capacity utilization at factories rose to 78.4% of capacity in June from 76.5% in June 2004. Over time, sustained increases in factory output and utilization imply higher demand for factory construction. In a quarterly survey of 60 financial executives in manufacturing, posted on Friday by the Manufacturers Alliance/MAPI (www.mapi.net), “The investment index jumped significantly, from 69% in March to 78% in June, indicating that capital investment in 2005 will rise above last year's level…The capacity utilization index, based on the percentage of firms operating above 85% of capacity, rose from 34.3% in March to 36.7% in June, while the percentage of firms operating at less than 75% of capacity fell from 11.9% to just 8.3%.”

In another sign that the market will remain hot for hotel construction, the Wall Street Journal reported on Wednesday that “developers have 917 projects in the pipeline that will add about 100,000 new rooms in the U.S. in 2007 alone,” citing the projection of Pat Ford, president of research firm Lodging Econometrics. That compares to 71,000 rooms to be added this year but is below the peak of 156,000 set in 1998. “Even all those new rooms won't be enough to add much supply, especially in the top markets. Last year net supply grew just 1% as developers opened a relatively low number of rooms while the condo craze caught fire. Hotel supply actually went down in six of the top 25 markets last year as developers converted hotels into condos and closed obsolete hotels, and that pace has increased. So far this year, supply has fallen in 11 of the top 25 markets. 'The implications are that 2008 and '09 will also be very strong,' Mr. Ford says. 'There's no visible reversal in the lodging industry through decade end.'”

Did you enjoy this article? Click here to subscribe to Plumbing & Mechanical. 

Recent Articles by Ken Simonson

You must login or register in order to post a comment.

Multimedia

Videos

Image Galleries

BNP Media's Plumbing Group Visits Grundfos North American Headquarters

BNP Media’s Plumbing Group, comprised of the Plumbing & Mechanical, Supply House Times, PM Engineer (pme) and Reeves Journal brands, recently visited Grundfos’ new North American headquarters building in the western Chicago suburb of Downers Grove, Ill.

THE MAGAZINE

Plumbing and Mechanical

March 2014

2014 March

In the March issue of Plumbing & Mechanical, read about the 'living in place' movement and learn how to make your space stylish and comfortable. PM catches up with MCAA president Chuck Fell and spoke with him about his goals for the year. Also in this issue, see the top products of 2013, see who is the March Truck of the Month, and read the latest Tool Tips.
Table Of Contents Subscribe

Trade Associations

Are trade association memberships and participation beneficial to your company?
View Results Poll Archive

The Plumbing and Mechanical Store

plumbing-hvac.gif
2014 National Plumbing & HVAC Estimator

Every plumbing and HVAC estimator can use the cost estimates in this practical manual!

More Products

Clear Seas Research

Clear Seas ResearchWith access to over one million professionals and more than 60 industry-specific publications,Clear Seas Research offers relevant insights from those who know your industry best. Let us customize a market research solution that exceeds your marketing goals.

Truck of the Month

Truck of the month

Are you proud of how your service truck looks? Do the graphics give people whiplash as they drive by? Have your calls increased because people remember your truck — and your company name? If so, we’d like to see it, too! Click here to find out how your service truck could be chosen as PM's Truck of the Month.

 

STAY CONNECTED

Connect to PM on Facebook Connect to PM on Twitter  Watch PM on YouTube    Connect to PM on Linked In