According to Data Digest, "The producer price index (PPI) for inputs to construction industries—a weighted average of the cost of materials used in every type of construction, plus items consumed by contractors such as diesel fuel— climbed 0.9% in December, not seasonally adjusted, and 5.4% compared with December 2009, the Bureau of Labor Statistics reported on Thursday.

The December-to-December increase was the largest since 2005. Construction costs outstripped the PPI for finished goods, which rose 0.6% in December and 4.0% in 2010. Prices soared at double-digit rates over the year for four key inputs. Prices climbed 2.3% in December and 28% in 2010 for diesel fuel, 0.5% and 12.5% respectively for steel mill products, 1.3% and 12% for copper and brass mill shapes, and 12% over the year for aluminum mill shapes, despite a 0.2% dip in December.

Other items that contributed to the December rise, but less or not at all to the year-over-year gain, included lumber and plywood, 1.5% and 5.7% respectively; architectural coatings, primarily paint, 1.5% and 0; brick and structural clay tile, 1.0% and 0.6%; and gypsum products, 0.8% and 3.4%. Prices in December and the year were little changed for asphalt paving mixtures and blocks, 0.2% and 4.6%; concrete products, 0.2% and -0.2%; and insulation materials, -0.5% and 4.4%.

Meanwhile, lack of work and strong competition have forced contractors to hold the line on bid prices. The PPI for new office construction dropped 0.8% in the month and year. The index for new industrial buildings was flat in December and up 0.4% in 2010 as a whole; new warehouses, up 0.1% and 0.4%; and new schools, flat and up 1.3%.

The PPI for nonresidential new and repair work by roofing contractors was flat and down 2.1%; concrete contractors, 0 and 0.5%; electrical, 0.1% and 0.9%; and plumbing, 0 and 1.7%.