Dive Brief:
- Construction input prices ticked up 0.1% month over month in July and were about 7.4% higher than July 2025, according to an analysis of the latest U.S. Bureau of Labor Statistics data by Associated Builders and Contractors released Thursday.
- Lower energy costs, particularly in crude petroleum and unprocessed energy materials, helped keep the monthly increase muted, said Anirban Basu, ABC chief economist.
- “Construction input prices were virtually unchanged in July, but that relatively tame behavior can be traced to the dip in fuel prices that occurred at the start of the month,” said Basu in the release. “Given the subsequent rebound in oil prices and ongoing increases in certain materials prices, such as lumber and iron and steel, materials prices will almost certainly continue to climb in the months to come.”
Dive Insight:
The tame monthly change in July understates cost increases contractors will face in the months ahead, especially as fuel and other materials prices swell, said Basu.
Prices decreased month over month in two of three energy subcategories in July, led by an 11.9% drop in crude petroleum prices and a 7.4% decrease in unprocessed energy materials, according to the ABC analysis, which focuses on the prices for physical commodities used in construction. Natural gas prices, on the other hand, accelerated 10.4% during that span.
But jumps should begin to show in energy categories soon. Diesel fuel prices, for example, surged more than 50 cents per gallon since prices were measured for the index, said Basu.
The annual increase in prices and ongoing inflation, however, have yet to dampen the mood for construction firms, noted Basu. Contractors on average still expect profit margins to expand over the next six months, according to ABC analysis.
Nevertheless, elevated construction costs could eventually stifle overall project activity, according to the Associated General Contractors of America’s analysis of the BLS data, which, in addition to goods prices, includes costs for construction services.
AGC pointed to tariffs as one source of that pressure, particularly on metals including aluminum mill shapes and copper. Other construction materials that increased at their fastest rate in years include lumber and plywood, according to AGC.
“Construction firms are being hit with outsized cost increases for a host of materials and also labor,” said Ken Simonson, AGC chief economist. “Unless there is relief from tariffs or additional funding for highway and transit projects, both private and public construction work face cutbacks.”
