Energy Prices Drive Construction Materials Costs Higher in October

Construction input prices increased .3% in October compared to the previous month, according to an Associated Builders and Contractors’ analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data. Nonresidential construction input prices also increased .3% for the month.

Prices increased in all three energy subcategories last month. Natural gas prices increased by 29.3%, unprocessed energy materials prices rose 9.9% and crude petroleum prices advanced by 7.3%. Overall construction input prices are .2% lower than a year ago, while nonresidential construction input prices are 0.5% lower.

“Higher energy prices drove the increase in construction input prices observed in October,” said ABC Chief Economist Anirban Basu. “While prices for a few other materials, like concrete and copper products, also rose for the month, overall input prices are lower than they were one year ago and have fallen 5% since reaching an all-time high in June 2022.”

Heading into 2025, Basu said it’s unclear if prices will remain so well-behaved. “The next administration’s trade policy increases uncertainty regarding construction materials costs. Beyond the implications of potential tariffs, input prices may rise in the short term if purchasers rush to import materials prior to the implementation of those policies. As of October, contractors expected their profit margins to expand through the first quarter of 2025, according to ABC’s Construction Confidence Index. That portion of the index will bear close watching as trade policy shifts in the coming months.”