Construction input costs accelerated in September, adding pressure to contractors already managing volatile material prices and tighter profit margins. Prices for construction inputs rose 2.2% from August, while costs for nonresidential construction inputs increased 2.3%, according to an analysis of U.S. Bureau of Labor Statistics Producer Price Index data.
Both measures recorded an 11.2% increase from September 2025 to September 2026, marking the largest annual rise in construction input prices in nearly four years.
Energy-related materials recorded substantial increases during September. Crude petroleum prices rose 28.3%, while unprocessed energy materials prices increased 22.2%. Natural gas prices climbed 5.1% over the month.
Higher fuel costs have contributed significantly to the broader increase in construction inputs. At the same time, prices for materials affected by tariffs, including iron, copper and other metal products, have continued to rise.
These increases can affect project budgets, procurement decisions and contractors’ ability to maintain pricing established before construction begins. Firms working under fixed-price contracts may face particular pressure when material costs rise faster than anticipated.
The continued increase in input prices is adding uncertainty to contractors’ financial outlook. More than one in four contractors expect their profit margins to decline over the next six months, according to the Associated Builders and Contractors’ Construction Confidence Index.
Rising fuel and material costs can reduce the gap between project revenue and expenses, particularly when contractors cannot pass higher costs on to clients. Businesses may need to reassess purchasing schedules, contract terms and contingency allowances to manage exposure to further price increases.
The September data highlight the ongoing cost challenges facing the U.S. construction industry. With overall and nonresidential input prices both up 11.2% year over year, contractors may face continued pressure on project estimates and profitability. Monitoring material prices and accounting for potential cost changes will remain important as firms plan upcoming work and negotiate contracts.
Source: Central Ohio ABC.
