WASHINGTON, D.C.— Construction input costs continued to edge higher in September, with several key materials showing firm year-over-year increases, according to an analysis released Tuesday by the Associated General Contractors of America (AGC). The findings show that contractors are facing renewed cost pressures at a time when demand in multiple private-sector construction markets remains mixed.
The producer price index (PPI) for materials and services used in nonresidential construction rose 0.2% in September and 3.2% compared with September 2024.
“Persistent input-price pressure, even when the increases are modest, creates a stop-and-go rhythm in procurement and production instead of a steady flow contractors and suppliers need,” said Macrina Wilkins, AGC’s senior research analyst. “These month-to-month swings make it harder for firms to plan confidently and protect already-thin margins.”
Key Materials Show Significant Year-Over-Year Gains
Several major material categories showed substantial increases compared with one year ago:
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Aluminum mill shapes: up 1.7% for the month, 26% year-over-year
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Steel mill products: down 1.5% for the month, but up 12.4% year-over-year
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Precast concrete products: up 0.3% for the month, 5.5% year-over-year
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Diesel fuel: up 1.8% for the month, 8.2% year-over-year
Diesel fuel remains a major cost driver for off-road construction equipment and transportation, influencing project budgets even beyond direct materials pricing.
Margin Pressure Intensifies as Bid Prices Cool
AGC said the September data reflects a continued imbalance between rising input costs and softening bid prices, driven by a slowdown in some commercial markets and hesitation among private investors.
Association officials noted that this mismatch — where material prices rise while contractors have limited ability to increase bid pricing — is compressing margins and complicating project forecasting.
They also pointed to uncertainty surrounding tariffs and global trade conditions as an additional factor constraining firms’ ability to secure long-term pricing or make major procurement commitments.
Industry Calls for More Predictable Policy Environment
“Contractors can manage modest cost increases, but they need a predictable environment to keep projects moving,” said Jeffrey D. Shoaf, AGC’s chief executive officer. “Greater clarity on tariff policy and progress on outstanding trade issues would help stabilize materials markets and give firms more confidence to plan for the work ahead.”
AGC said it will continue to monitor pricing trends and advocate for policies that support greater stability in materials markets and project planning.
