Construction input prices in the United States jumped 2.2 percent in September from August and 11.2 percent from a year earlier, the largest annual increase in nearly four years, according to an Associated Builders and Contractors analysis of federal Producer Price Index data released on Thursday. Higher fuel costs linked to the conflict in Iran and tariff effects on key materials drove a substantial portion of the increase.
The Associated General Contractors of America, analysing the same federal data with services included, found the largest increases in petroleum products, with metals prices also up sharply since tariffs were introduced last year. AGC said construction firms are absorbing most of the cost increases amid soft demand for projects outside the data centre boom, and that supplier order books are full through spring 2027, with some firms told they will receive only a small fraction of ordered steel beams and alternative suppliers refusing new customers.
The margin consequence is already visible in expectations. ABC chief economist Anirban Basu said more than one in four contractors now expect profit margins to contract over the next six months. AGC chief economist Ken Simonson described tariff and war induced materials costs permeating a widening range of prices, with longer lead times for key steel components making schedules harder to hold.
For this beat the print reprices the pipeline. Project budgets, PPP availability payments and arena, bridge and plant contracts signed on earlier cost assumptions face the same input curve, and AGC used the release to press Congress for a new multi year surface transportation bill and for resolution of trade disputes, arguing infrastructure work is one of the few reliable sources of construction demand outside data centres.