Surge in Construction Material Costs Challenges Contractors' Profitability
Key Highlights
- Construction input prices increased by 1.2% in August, with nonresidential construction experiencing similar growth
- Energy subcategories saw mixed changes: crude petroleum up 5.2%, unprocessed energy materials up 1.5%, but natural gas down 11.6%
- Trade tensions and rising oil prices above $100 per barrel may further influence input costs and profitability
WASHINGTON, DC — Producer Price Index (PPI) data released September 10 by the Bureau of Labor Statistics shows construction input prices increased 1.2% in August over the previous month. Nonresidential construction input prices increased 1.2% for the month as well.
In August, prices increased in two of the three energy subcategories. Crude petroleum prices expanded 5.2% and unprocessed energy materials prices rose 1.5%, while natural gas prices were down 11.6%.
Overall, construction input prices are 8.9% higher, and nonresidential construction input prices are 8.8% higher, than they were at this point in 2025.
Prices vs. Profits
“Construction input prices surged again in August, and the increases were widespread across materials,” said ABC Chief Economist Anirban Basu. “Prices for iron and steel, softwood lumber, switchgear, copper wire and cable, and several derivative metal products are now up more than 10% year over year.
"While contractors remain optimistic about their margins, according to ABC’s Construction Confidence Index, ongoing input price escalation is likely to weigh on profitability over the next several months. This is especially true given recent escalation in the trade war with Canada and the fact that oil prices have jumped back above $100 per barrel.”
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.