The prices of goods used in residential construction increased 1.8% in May and have increased 19.4% on a year-over-year basis, according to the latest Producer Price Index (PPI). Building material prices increased 36.3% on a YOY basis, driven by gypsum, steel, and softwood lumber.
The price of truck transportation of freight increased 2.9% in May and has climbed 25.8%, year-over-year. Long-distance and local motor carrying prices are up 28.2% and 18.4%, respectively, over that period.
Water transportation costs have jumped 21.5% over just the past two months and have increased 35.7% over the past 12 months. Prices of rail transportation services for freight gained 2.7% in May and have increased 11.7% and 15.4% since May and January of 2021, respectively.
The PPI for softwood lumber (seasonally adjusted) increased 0.4% in May after declining 15.6% in April. According to Random Lengths data, the “mill price” of framing lumber has fallen more than 35% since mid-May.
The PPI of most durable goods for a given month is largely based on prices paid for goods shipped, not ordered, in the survey month. Combined with survey timing issues, this can result in lags relative to cash market prices, suggesting a large decrease in the softwood lumber producer price index may be reflected in next month’s release.