4Q Inflation Trends: Building Products See Strongest Gains YOY - Modern Distribution Management

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4Q Inflation Trends: Building Products See Strongest Gains YOY

Most other segments had more moderate pricing shifts in the fourth quarter and in 2012 overall.

After a troubled few years, building materials looks to be bouncing back. Pricing trends in the fourth quarter MDM-Baird Distribution Survey showed that the largest price increases for the quarter were seen in building materials, which also had an average 5.2 percent sales growth for the fourth quarter.

The Associated General Contractors of America reported in its January report on construction material prices that most of 2012 saw moderate price swings, but contractors are expecting steeper price increases going into 2013.

In MDM’s recently released Fourth Quarter and Annual Pricing Trends Report, the largest wholesale price increases year-over-year in the fourth quarter were in softwood lumber, with a 12.5 percent increase, and hardboard, particleboard and fiberboard, up 24.2 percent. Plywood and gypsum products also saw double-digit increases from the fourth quarter 2011 to fourth quarter 2012. However, price increases from the third quarter to the fourth quarter were in the low single digits for construction products, consistent with the AGC report. MDM's Pricing Trends Report is based on the Bureau of Labor Statistics' Producer Price Index.

In the MDM-Baird Distribution Survey, aside from building materials, most other segments held below 2 percent price increases for the quarter. On average across sectors, pricing was up 1 percent in the fourth quarter 2012 in the survey.

Other construction-related segments are seeing strong pricing in the MDM-Baird survey, with roofing distributors seeing double-digit shingle price increases. “Manufacturers have announced price increases in the 10-14 percent range,” one respondent wrote. In wire & cable, pricing trends have moderated, with copper becoming a “non-issue.” “With flat copper, we can usually push margins up or at least maintain them,” a respondent said.

Industrial distributors in the MDM-Baird survey reported modest new-year price increases. “The price increase cycle is back to normal,” wrote one respondent. “It seems like the suppliers think they have a right to raise price once a year forever.”

MDM’s Fourth Quarter and Annual Pricing Trends Report found mostly moderate increases across the dozens of product groups it tracks. Subscribers can access the report here, and non-subscribers can purchase the report or subscribe today for access.

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