Prices For Nonresidential Construction Materials and Services Rise 0.8 Percent in January as Contractors Brace for Impacts of New Tariffs

The price of materials and services used in nonresidential construction increased 0.8 percent from December to January, the largest jump in costs in the past 12 months, according to an analysis by the Associated General Contractors of America of government data released today. Association officials warned that steel and aluminum tariffs will further boost the cost of key construction materials and are likely to make construction projects more costly and invite retaliation by U.S. trading partners.

“Input costs are likely to jump even more if the Trump administration goes ahead with the tariffs it has threatened to impose,” said Ken Simonson, the association’s chief economist, noting that the January data was collected prior to the inauguration of President Trump. “Contractors that have started fixed-price projects will be squeezed by higher materials costs, while rising costs and delayed availability will make future projects more expensive.”

The producer price index for new nonresidential construction—a measure of what contractors report they would charge to put up a specific set of buildings—climbed 0.3 percent in January and 1.7 percent over the past 12 months. The cost of cement rose by 3.2 percent in January year-over-year, while ready-mixed concrete increased by 4.1 percent compared to a year ago. Asphalt paving mixtures saw a significant 8.6 percent rise. On the metals side, aluminum mill shapes climbed 9.7 percent for the year, and copper and brass mill shapes surged 12.3 percent during the past twelve months—both critical components in electrical and plumbing applications.

Association officials cautioned that materials costs, particularly for steel and aluminum products, are likely to continue increasing now that the Trump administration has imposed a 25 percent tariff on those products. They noted those increases will make the cost of many construction projects more expensive, potentially prompting some activity to be delayed or cancelled. 

“The math is pretty simple, the more contractors have to pay for the materials they need, the more it will cost to build new infrastructure, housing and economic development projects,” said Jeffrey Shoaf, the chief executive officer of the Associated General Contractors of America. “As much as want to see new domestic manufacturing capacity, stifling construction activity is clearly not the best way to help.”

View producer price index data.