After a slower winter, the U.S. construction materials market is coming around with stronger January activity. Orders and production have steadily increased for the last three months. Materials prices increased 9% annual rate for the three months ending through January even as inventory sat at manufacturers and unfilled orders increased.

As construction work hours rose 3.4% in February, the market is expected to keep strengthening. However, due to the devastating Japanese earthquake, materials orders and shipments will probably be slightly negative in the coming months.

Heavy construction fell 3.6% in January entirely due to the drop in power construction, but is expected to increase 6.4% total in 2011. Although there is an expected rise from increasing materials costs and projects being completed with earlier federal funds, spending will decrease as Congress construction funds and possibly recalls previously unspent funds.

Source: Reed Construction Data