Construction MMI®: Housing Recovery Still Shaky as Permits Fall in November

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The US economy grew at a 5% annual rate in the third quarter, the strongest pace in 11 years and much better than expected. The Federal Reserve last week gave the economy a vote of confidence, lowering its unemployment rate forecast and signaling it could start raising interest rates in mid-2015.

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Inflation remains low and has sagged lower in recent months, largely because of falling oil prices. Low inflation and sagging commodities prices are a possible signal of weak underlying demand, particularly overseas. Wage growth remains sluggish and housing starts fell 1.6% in November. Permits for single-family residences decreased slightly to 639,000. Multi-family permits decreased to 367,000, signalling continued shakiness in the housing sector with lack of skilled labor the number one culprit.

The week’s biggest mover on the weekly Construction MMI® was the weekly US Midwest bar fuel surcharge, which saw a 7.9% decline to $0.42 per short ton. Last week marked the fourth in a row of declining prices for the metal. The weekly US Rocky Mountain bar fuel surcharge fell 7.2% over the past week to $0.43 per mile. This was the fourth week in a row of declining prices. The weekly US Gulf Coast bar fuel surcharge fell 7.2% over the past week to $0.39 per mile. This was the fourth week in a row of declining prices.

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In the past week, US shredded scrap saw its price shift up 1.5% to $333.00 per short ton. Chinese H-beam steel fell 0.7% over the past week to CNY 2,830 ($454.77) per metric ton. The price of Chinese rebar fell 0.3% over the past week to CNY 2,860 ($459.59) per metric ton. This was the fourth week in a row of declining prices. This past week, the Chinese low price of 62% Australian iron ore fines kept quiet, holding at at CNY 970.00 ($155.88) per dry metric ton.

For the third week in a row, the price of Chinese aluminum bar dropped, falling 1.7% to CNY 13,110 ($2,107) per metric ton. European 1050 aluminum traded sideways last week, hovering around EUR 2,613 ($3,238) per metric ton.

The Construction MMI® collects and weights 9 metal price points used within the construction industry to provide a unique view into construction industry price trends. For more information on the Construction MMI®, how it’s calculated or how your company can use the index, please drop us a note at: info (at) agmetalminer (dot) com.

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