U.S. construction input prices rose 3.5 percent in October from a year earlier, according to new U.S. Bureau of Labor Statistics producer price index data analyzed by Associated Builders and Contractors.
ABC said the increase was driven by sustained year-over-year gains in categories such as concrete products, electrical equipment and various steel inputs, adding that continued cost pressure is expected as contractors prepare bids and procurement schedules for 2026.
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Materials prices also rose from September, extending a lopsided upward trend that persisted through the federal government shutdown. ABC noted that the high cost environment matched the weakness in indicators in its latest survey data.
Ahead of the federal government’s reopening, the ABC reported on Nov. 11 that its gauge of construction backlog fell to 8.4 months in October, down from 8.5 months in September and the lowest level since May.
The decline was concentrated among the smaller firms in the survey, whose backlog fell sharply to 5.8 months, while the heavy industrial backlog rose to 8.8 months and the infrastructure backlog rose to 9.8 months.
Sentiment softens as inflation remains sticky
ABC’s construction confidence index also weakened in October. Profit margin and headcount expectations declined, while sales expectations remained stable. All three readings remain above 50, indicating that contractors still expect growth over the next six months, but at a slower pace.
“Nearly 65 percent of contractors indicated they believe the U.S. construction industry is contracting,” ABC Chief Economist Anirban Basu said in the Nov. 11 statement.
He added that 23% of contractors expect sales to decline over the next six months, the highest share in more than a year, and that companies that work in data centers continue to experience a notably larger backlog than those that don’t.
The latest price data indicates that construction inflation remains sticky, even as U.S. headline inflation has cooled since the 2022 peak.
High material costs, combined with a weakening backlog and reduced margin expectations, suggest continued pressure on project budgets, particularly in commercial and institutional markets that have shown little upturn this year.
Contractors active in industrial megaprojects and data centers continue to show the strongest portfolios. Firms linked to smaller commercial projects and public sector building works remain the most exposed to prolonged cost escalation, tighter demand and potentially more competitive tenders through early 2026.
