Construction input prices rose 2.2% in September, while nonresidential construction input prices increased 2.3%, according to an Associated Builders and Contractors (ABC) analysis of U.S. Bureau of Labor Statistics Producer Price Index data.
Both overall and nonresidential construction input prices climbed 11.2% year over year, marking the largest annual increase in nearly four years. Energy costs were a major contributor, with crude petroleum prices jumping 28.3%, unprocessed energy materials rising 22.2%, and natural gas prices increasing 5.1% for the month.
“While higher fuel prices brought about by the conflict in Iran have driven a substantial portion of the increase, prices for tariffed materials like iron, copper and other metal products continue to rise rapidly,” said ABC Chief Economist Anirban Basu.
The continued escalation in material costs adds pressure to construction budgets and project feasibility, particularly as contractors contend with elevated financing costs and uncertainty surrounding future pricing.
“In light of this precipitous and ongoing increase in materials prices, it is unsurprising that more than 1 in 4 ABC contractors expect their profit margins to contract over the next six months, according to ABC’s Construction Confidence Index.”
Visit abc.org/economics for the Construction Backlog Indicator and Construction Confidence Index, plus analysis of spending, employment, job openings and the Producer Price Index.
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