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Dive brief:
- Construction input prices rose 0.6% in November as the effects of the tariffs became more visible in the data, according to an Associated Builders and Contractors analysis of the US Bureau of Labor Statistics’ producer price index numbers.
- According to the report, input costs for overall and non-residential construction are 3.4% and 3.8% higher than a year ago.
- While this annual increase is relatively modest, it is also the largest since January 2023 and presents “a lot of cause for concern,” said Anirban Basu, ABC’s chief economist.
Diving knowledge:
The latest PPI report did little to ease worries about materials costs, which ranked as one of the best headwinds for contractors in 2026according to the Associated General Contractors of America.
For example, the producer price index for aluminum mill formswhich are subject to a 50% tariff, soared 28% between November 2024 and November 2025. Meanwhile, the index of steel products, which are also subject to a 50% tariff, rose 4.6%. Other steel product indexes, such as fabricated structural metal bar joints and rebar, also rose 16.6 percent, according to the AGC report.
“Input costs for construction are rising faster than for producers or consumers in general, in part because the industry faces high tariffs on many materials,” said Ken Simonson, AGC’s chief economist. “While many contractors are ramping up purchases and trying to pass on cost increases, their bid prices have not kept up, rising just 2.7% over the past 12 months.”
AGC officials said the PPI report shows that tariffs are actually driving up construction costs.
“Frequent increases and announcements about potential rates have increased the cost of construction and made property owners hesitant to commit to projects,” AGC CEO Jeffrey Shoaf said in the statement. “Contractors and owners alike need more certainty and fewer price shocks from rates to ensure a healthy construction market in 2026.”
Looking ahead, Basu said the lack of clarity will present even more challenges for contractors in the coming year.
“Unfortunately, it’s impossible to know exactly how the cost of tariffs will be distributed throughout the supply chain,” Basu said. “This makes it exceptionally difficult to know how construction input prices will behave in 2026.”
