Producer Prices Decrease…For Now

Producer Prices Decrease…For Now

The Bureau of Labor Statistics (BLS) released the Producer Price Indexes (PPI) for August. Inflation in prices received by producers (prior to sales to consumers) were unchanged in August following a 0.2% increase in July. Separately, a 0.4% increase in prices for services was offset by a 0.6% decline in prices for goods, driven mainly by falling gas prices. Excluding food and energy, goods prices were -0.2% lower in August.

Building Materials
Among building materials, softwood lumber prices partially reversed the 2.4% increase in July, declining 2.2% in August. Prices have hovered in this range since early 2014. Similarly, OSB price dropped 0.8% after a 1.0% increase in July. Overall, soft overseas demand has kept domestic supply at home placing downward pressure on prices.
Gypsum prices dropped another 0.9% in August, bringing the decline from a February peak to 6.5%. Gypsum prices are now slightly below the housing boom peak (although single family housing starts are just above one half of a healthier/lower pre-boom pace). But it’s approaching the end of the year and a recent tradition is entering its fifth year. Major producers of drywall and ceiling tiles (made of Gypsum) are announcing an array of price increases scattered through the second half of this year and 2016.
National Gypsum, USG, Armstrong, American Gypsum and CertainTeed/Saint-Gobain have all announced price increases, ranging from 5% to 10% now and another 10% next August, for wallboard and/or ceiling tiles, some effective as early as August 2015 and running through 2016.
It looks like recent gypsum price declines will be short lived.

Emerging Workforce Stats

According to XYZ University, a demographics consulting firm specializing in organizational dynamics, the U.S. Workforce will change in significant ways in the next five years:

  • By 2015, Generation Y (born since 1982) will out number Baby Boomers (born between 1946 and 1964) in the workforce.
  • On average, 10,000 Baby Boomers retire each day.
  • Generation X (born between 1965 and 1982) will make up 65 percent of the workforce by 2020.
  • 70 percent of college grads leave their first job within two years.
  • 75 percent of employed Americans are looking for a job.
  • One in three college students and young professionals under the age of 30 prioritize social media freedom over salary in accepting a job offer.

The U.S. Bureau of Labor Statistics predicts a shortage of 10 million workers due to the retirement of Baby Boomers.

Residential Construction Employment Rose in 2011

Residential Construction Employment Rose in 2011

Source: Bureau of Labor and Statistics

For the first time since 2006, residential construction rose.  Employment in residential construction rose 46,000 jobs in 2011, and currently stands at 2.18 million jobs lower than its peak in 2006.  According to Calculated Risk, construction employment is still “mostly moving sideways, but at least it was not a drag on employment and GDP in 2011.”


Read the full report at calcualtedriskblog.com by clicking here.

National Public Radio also provided good news about construction employment in a report they aired on January 6.

To read the report at NPR.org, click here.