Dive Brief:<\/h3>\n\n- Construction input prices jumped 1.4%<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in January, marking the largest monthly increase in two years, according to an analysis by Associated Builders and Contractors.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n
- Energy costs drove much of that increase, with crude petroleum, natural gas and unprocessed energy all rising.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n
- However, the price jump also stems from a rush to purchase materials ahead of potential tariffs, said Anirban Basu, ABC chief economist. The cost of inputs to construction now sits 40.5% higher than February 2020, according to the report.<\/span><\/span><\/span><\/span><\/span><\/span><\/li>\n<\/ul>\n
Dive Insight:<\/h3>\n
The latest construction input price surge underscores <\/span><\/span><\/span><\/span><\/span><\/span>concerns among contractors<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> about material costs, particularly in light of new <\/span><\/span><\/span><\/span><\/span><\/span>steel and aluminum tariffs<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>, according to Associated General Contractors of America.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nEven <\/span><\/span><\/span><\/span><\/span><\/span>before Trump\u2019s inauguration<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>, the high probability of tariffs already appeared to have been driving price increases, said Ken Simonson, AGC chief economist.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n![\"-\"](\"https:\/\/lh7-rt.googleusercontent.com\/docsz\/AD_4nXeJklVNViStIRWyHs3Cw4Hh_JL91STJhMP0t7ibt-5FCGaHwL3jBfOnvaiLfaMB0gAfd_CRUDEYYO4CVTfnilZ7cQToMP-mF1VcCIiuiDCV5mpMO2j3lv_RNf3eZ6WiLb2NG-dc?key=5ytuO7QupH-1X7ptdXSzexjW\")
<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cThe mere threat of new tariffs appears to have led to a significant jump in the cost of many construction materials,\u201d said Simonson, noting that the January data was collected prior to Trump\u2019s inauguration. \u201cContractors that have started fixed-price projects will be squeezed by higher material costs, while rising costs and delayed availability will make future projects more expensive.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nThe sharp increase in prices signals a shift after a year of <\/span><\/span><\/span><\/span><\/span><\/span>relative stability for contractors<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>. That\u2019s largely due to three factors, said Basu.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cFirst, energy prices rose sharply. Second, producers often raise their prices at the start of the year,\u201d said Basu. \u201cAnd third, many purchasers rushed to buy inputs before potential tariffs could go into effect, and that surge in demand pushed prices higher.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\nOf these factors, tariffs will likely have the most lasting impact, said Basu.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n\u201cA strong majority of contractors expect their sales to <\/span><\/span><\/span><\/span><\/span><\/span>increase over the next six months<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>,\u201d said Basu. \u201cThe combination of increased demand for construction inputs and ongoing supply chain confusion suggest input price escalation could accelerate through the first half of 2025.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n
Dive Insight:<\/h3>\n
The latest construction input price surge underscores <\/span><\/span><\/span><\/span><\/span><\/span>concerns among contractors<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> about material costs, particularly in light of new <\/span><\/span><\/span><\/span><\/span><\/span>steel and aluminum tariffs<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>, according to Associated General Contractors of America.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Even <\/span><\/span><\/span><\/span><\/span><\/span>before Trump\u2019s inauguration<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>, the high probability of tariffs already appeared to have been driving price increases, said Ken Simonson, AGC chief economist.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cThe mere threat of new tariffs appears to have led to a significant jump in the cost of many construction materials,\u201d said Simonson, noting that the January data was collected prior to Trump\u2019s inauguration. \u201cContractors that have started fixed-price projects will be squeezed by higher material costs, while rising costs and delayed availability will make future projects more expensive.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n The sharp increase in prices signals a shift after a year of <\/span><\/span><\/span><\/span><\/span><\/span>relative stability for contractors<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>. That\u2019s largely due to three factors, said Basu.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cFirst, energy prices rose sharply. Second, producers often raise their prices at the start of the year,\u201d said Basu. \u201cAnd third, many purchasers rushed to buy inputs before potential tariffs could go into effect, and that surge in demand pushed prices higher.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n Of these factors, tariffs will likely have the most lasting impact, said Basu.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n \u201cA strong majority of contractors expect their sales to <\/span><\/span><\/span><\/span><\/span><\/span>increase over the next six months<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>,\u201d said Basu. \u201cThe combination of increased demand for construction inputs and ongoing supply chain confusion suggest input price escalation could accelerate through the first half of 2025.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n