Dive Brief:
- Construction input prices increased 0.6% in November as the effects of tariffs became more visible in the data, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index figures.
- Both overall and nonresidential construction input costs are 3.4% and 3.8% higher than a year ago, according to the report.
- While that annual uptick is relatively modest, it’s also the largest since January 2023 and presents “plenty of cause for concern,” said Anirban Basu, ABC chief economist.
Dive Insight:
The latest PPI report did little to alleviate worries around materials costs, which ranked as one of the top headwinds for contractors in 2026, according to the Associated General Contractors of America.
For example, the producer price index for aluminum mill shapes, which are subject to a 50% tariff, soared 28% from November 2024 to November 2025. Meanwhile, the index for steel mill products, which are also subject to a 50% tariff, increased 4.6%. Other indices on steel products, such as for fabricated structural metal bar joints and rebar, also jumped 16.6%, according to the AGC report.
“Input costs for construction are rising faster than for producers or consumers in general, partly because the industry is faced with steep tariffs on many materials,” said Ken Simonson, AGC chief economist. “Although many contractors are accelerating purchases and attempting to pass along cost increases, their bid prices have not kept up, rising only 2.7% in the past 12 months.”
AGC officials said the PPI report shows tariffs are indeed driving up construction costs.
“The frequent increases and announcements about prospective tariffs have pushed up the cost of construction and made owners hesitant to commit to projects,” said AGC CEO Jeffrey Shoaf in the release. “Contractors and owners alike need more certainty and fewer price shocks from tariffs to assure a health construction market in 2026.”
Looking ahead, Basu said the lack of clarity will present even more challenges for contractors in the year ahead.
“Unfortunately, it is impossible to know exactly how the cost of tariffs will be distributed throughout the supply chain,” said Basu. “That makes it exceptionally difficult to know how construction input prices will behave in 2026.”
