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Dive brief:
- Construction input prices rose 1.2% month over month in August and is now up 8.9% from August 2025, according to an analysis of the latest U.S. Bureau of Labor Statistics data by Associated Builders and Contractors released Thursday.
- According to the report, year-on-year cost increases of 10% or more affected many key construction materials, including switchgear, iron, steel, softwood, copper wire and various derived metal products.
- “Continued escalation in input prices is likely to weigh on profitability over the coming months,” said Anirban Basu, chief economist at ABC. “This is especially true given the recent escalation of the trade war with Canada and the fact that oil prices have risen above $100 a barrel.”
Diving knowledge:
Higher material prices lead to more developers put the brakes on construction activityaccording to Associated General Contractors of America.
about 55% of contractors reported dropouts or delays in the past six months, according to AGC’s September survey. One-third of respondents attributed these disruptions to rising costs, according to the AGC report.
“Construction firms are being squeezed by rising material costs induced by tariffs and the war, even as they raise wages to attract staff,” Ken Simonson, AGC’s chief economist, said in a news release. “These cost increases, according to our latest survey, are one of the main reasons project owners cancel, postpone or scale back projects.”
Metals and oil products posted some of the steepest year-over-year price increases, according to ABC analysis. Steel products rose 23.4% since August 2025, while iron and steel rose 17.9% during that time. Crude oil, on the other hand, increased by 34.9% during the last 12 months.
Switchgear and copper cable, both critical to data center constructions, increased by 12.3% and 27.2%, respectively, from August 2025.
“As companies pay more to deal with labor shortages and material prices continue to rise, they are caught between exiting the market or operating at a loss,” said AGC CEO Jeffrey Shoaf. “Rising material prices and a lack of real federal commitment to construction workforce development are acting as a drag on economic activity that, if not addressed, could have significant consequences for the broader economy.”
