Materials market reports soured in February. Production rose 0.6% from January but prices rose even faster. Orders fell sharply but this measure is too volatile for the drop to be a serious concern. Manufacturers reported a larger rise min inventory than in sales so the inventory/sales ratio inched up from an already high level. The February results are directionally consistent with the drop in construction spending in January and February but are not as weak.

Materials production jumped 12.2% over the last twelve months as factory output picked up to approximately match current demand. Output gains will be slimmer in 2011, matching the change in construction spending. Then expect another double digit surge in production in 2012 when all constructio9n sectors are expected to be growing strongly.

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