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ABC: Industry prices rise, backlog falling

A national industry group reported Tuesday that the price of various material supplies increased for a third month in a row in February but that a commonly cited measure of construction activity fell at the end of the year.

The Associated Builders and Contractors reported that its index that tracks the average price of 11 specific inputs rose by 0.3 percent from January to February. That monthly increase, the third in a row, put the index at 4.8 percent above where it had been in February 2016.

The biggest increase was seen in the price of crude petroleum, which went up by 8 percent from January to February. The price for crude petroleum is also up for the year, having risen by 107.1 percent from February 2016 to February 2017.

Of the inputs tracked by the ABC, decreases were seen for only four: fabricated structural metal products; prepared asphalt, tar roofing and siding products; natural gas; and unprocessed energy materials. Of those, the biggest drop was seen for natural gas, whose average price fell by 18 percent from January to February.

Anirban Basu, ABC chief economist, said industry officials should not necessarily worry that demand will continue putting upward pressure on prices.

“The global economy is hardly poised to boom given structural factors like demographics and indebtedness,” he said in a statement. “The U.S. dollar has continued to strengthen, which has helped to keep a lid on commodity price increases. Moreover, energy prices have begun to retrench recently, including oil prices, which fell below $50 a barrel over the last few days.”

Separately, the ABC reported that its industry backlog — a measure of construction work still in the pipeline — fell by 4 percent in the fourth quarter of last year. That meant that construction companies, on average, had about 8.3 months of work under contract that quarter.

Companies in the so-called Middle States — a group that includes Wisconsin – saw their average backlog fall by 6.9 percent to 7.8 months. Still, ABC officials noted that the Middle State’s backlog remains higher than it was a year ago. Helping to buoy the region has been an increase industrial production, according to the ABC’s report.

ABC officials blamed much of the decrease seen in the national backlog on governments’ decreasing spending on public works projects.

“For instance, between January 2016 and January 2017, construction spending in the nation’s highway and street segment declined by more than 10 percent,” Basu said in the statement. “In the water supply, public safety and transportation components, the level of construction spending declined by closer to 11 percent. In the sewage and waste disposal category, construction spending declined by a whopping 28 percent.”

About Dan Shaw, dan.shaw@dailyreporter.com

Dan Shaw is the associate editor at The Daily Reporter. He can be reached at dan.shaw@dailyreporter.com or at 414-225-1807.

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