The cost of materials and services used in nonresidential construction posted its steepest annual increase in two-and-a-half years, according to federal data published yesterday by the
The for nonresidential construction inputs climbed 0.5% in July and 2.6% from the same month in 2024, marking the largest 12-month gain since February 2023, according to AGC’s chief economist, Ken Simonson.
Simonson said in a statement that “Steep tariff increases earlier this year on aluminum and steel, along with a more recent tariff on raw copper, drove the producer price index for construction inputs higher for the third straight month.”
“Even though contractors do not generally import materials directly, it is clear that domestic producers are raising prices in line with the protection tariffs are providing them,” Simonson added.
Tariff Impact on Core Materials from the AGC
- Aluminum mill shapes: Up 7.4% in July, up 13.7% year-over-year
- Steel mill products: Down 0.5% in July, but up 8.8% year-over-year
- Copper and brass mill shapes: Up 5.7% in July, up 6.9% year-over-year
The administration raised tariffs on from 25% to 50% on July 4, while a new 50% tariff on raw copper took effect on August 1.
Additional from nearly all major construction material suppliers began in early August, creating expectations for further price increases in the months ahead.
Market Pressure Amid Slowing Demand
AGC officials said that contractors are being squeezed between rising material costs and slowing demand in certain private-sector markets, which are being weighed down by high interest rates and economic uncertainty.
“This administration has acted quickly to craft , but several outstanding deals are leaving saddled with higher materials prices as tariff levels remain high,” said Jeffrey D. Shoaf, AGC’s CEO.
“Finalizing these negotiations could ease some of the pricing pressure and help stabilize the market.”
For construction firms, the combination of heightened tariffs, slowing demand, and increased financing costs presents a challenging business environment heading into the fall building season.
ConstructConnect and the . Ken Simonson is regularly featured on ConstructConnect’s with ConstructConnect Chief Economist Michael Guckes and other special guests.
