Contractors Face Renewed Cost Pressures as Key Materials Show Firming Prices Across 2025
The producer price index for materials and services used in nonresidential construction rose 0.2 percent in September and 3.2 percent from September 2024, according to an analysis by the Associated General Contractors of America of government data released today. Association officials said the latest figures underscore how cost pressures are resurfacing for contractors even as overall demand in several private-sector construction segments remains muted.
“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, the association’s senior research analyst. She noted that “these month-to-month swings make it harder for firms to plan confidently and protect already-thin margins.”
Several major input categories saw notable year-over-year increases. The producer price index for aluminum mill shapes increased 1.7 percent last month and 26 percent from September 2024. While the index for steel mill products fell 1.5 percent in September, it climbed by 12.4 percent over the past 12 months. The index for precast concrete products inched up 0.3 percent for the month and 5.5 percent year-over-year. Diesel fuel, a critical input for off-road equipment and transportation, rose 1.8 percent for the month and 8.2 percent year over year.
Association officials said the September data shows that contractors are facing modest but persistent increases in input costs even as bid prices have begun to cool. They noted that this imbalance, where materials costs edge higher while final demand and pricing power soften, is adding pressure for firms at a time when several private sector markets remain uneven. Uncertainty around future tariff levels and global trade conditions is adding another layer of caution, making it harder for contractors to plan procurement or secure long-term pricing with confidence.
“Contractors can manage modest cost increases, but they need a predictable environment to keep projects moving,” said Jeffrey D. Shoaf, the chief executive officer of the Associated General Contractors of America. “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.
View producer price index data.