Posted on March - 19 - 2011
Winter Storm Slowdown in Construction Materials Sales Revised Away
The winter slowdown in the construction marterials market had been revised away with strong January activity and upward revisions for December. Orders and production increased at a double digit pace in the last three months. Inventories at manufacturers inched up, unfilled orders soared and the manufacturers’ inventory/sales ratio slipped slightly lower but remains above average. Nonetheless, materials prices rose at nearly a 9.0% annual rate in the three months through January. Further market strengthening is expected to be reported in February based on the 3.4% rise in construction work hours in February.
The slim 1.0% gain in materials production in the last three months, combined with the increase in the materials price index, is consistent with the nominal dollar gains in shipments and inventories.
The Japanese earthquake is expected to be very mildly negative for materials orders and shipments as well as the materials price index in the next few months. But these negative impacts will be largely reversed later in the year when Japanese rebuilding begins.
CAUTION: The Census Bureau indexes for construction materials are overstating the size of the market. The indexes are constructed by dividing the use of materials between construction, manufacturing and other end markets. This allocation uses the historical shares of purchases of steel, plastics, glass and other materials by each end market. The Census Bureau has no specific information on the share of steel production shipped to the construction market. As a result, the strong rise in manufacturing activity causes too much material sales to be assigned to construction.
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- Construction Materials Surplus Rises in September
- Construction Materials Market Stabilizing
- Construction Equipment Shipments Inch Higher in February
- Construction Equipment Shipments Up Slightly in March
- Construction Materials Price Index Jumps 0.9% in January
