Construction input costs ticked upward again in September, adding fresh pressure to contractors already navigating uneven demand across several major construction sectors. According to new analysis from the Associated General Contractors of America (AGC), the producer price index for materials and services used in nonresidential construction rose 0.2% in September and 3.2% year-over-year, signaling that cost volatility remains a defining challenge for the industry.
AGC analysts noted that even moderate month-to-month price increases are enough to disrupt project planning.
“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.”
The September data revealed notable year-over-year gains across several essential construction materials:
AGC emphasized that diesel remains a major budget driver not only for off-road construction equipment but also for transporting materials to job sites—impacting project costs far beyond fuel alone.
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While materials continue trending upward, contractors in many markets face bid-price softening due to mixed demand in commercial and private-sector development. AGC said this widening gap—higher inputs paired with lower bid flexibility—is tightening margins and making project forecasting more uncertain.
Industry leaders also flagged ongoing tariff unpredictability and shifting global trade conditions as factors limiting firms’ ability to secure long-term pricing. As a result, many suppliers and contractors are hesitant to make large procurement commitments.
In response to the growing uncertainty, AGC underscored the need for clearer policy direction.
“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 monitoring input-cost trends and advocating for policies that support market stability, reduced volatility, and more predictable procurement conditions.
Originally reported by Boston Real Estate Times
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