Examining Trends in the Nonresidential Building Construction Producer Price Indexes (PPIs)

Abstract

In 2004, the Bureau of Labor Statistics (BLS) unveiled the Producer Price Index (PPI) nonresidential building construction initiative with the publication of an index for new warehouse building construction. PPI has since added nonresidential building construction indexes for schools, offices, industrial buildings, and health care buildings. This construction sector initiative is noteworthy as it expanded coverage into an important sector of the U.S. economy not previously measured by the PPI, and allowed the examination of different drivers of building construction inflation. According to Bureau of Economic Analysis (BEA) data, in the first quarter of 2005, the value of private fixed investment in structures totaled $1.137 trillion, representing about 8.9 percent of total gross domestic product (GDP). Of private fixed investment in structures, nonresidential structures alone represented$330.8 billion, or about 2.6 percent of total GDP. By the fourth quarter of 2013, nonresidential structures investments grew to $473.4 billion, or 2.8 percent of total GDP