Dive Brief:
- Total construction and nonresidential input prices declined 0.2% in December, according to an analysis by Associated Builders and Contractors.
- Much of the recent stability in input prices over the past year stems from lower energy costs, including a $0.45 per gallon drop in diesel prices since December 2023, said Anirban Basu, ABC chief economist.
- However, prices for copper and oil increased sharply to close 2024, raising concerns about material price hikes in 2025 if President-elect Donald Trump enacts steep tariffs, said Ken Simonson, chief economist at the Associated General Contractors of America.
Dive Insight:
ABC’s report reveals the ongoing tension between short-term stability in construction input prices and long-term concerns over volatility.
For example, the decline in December’s input prices reflects broader stability seen throughout much of 2024, with year-over-year increases of 0.9% overall and 0.6% for nonresidential inputs. But material-specific pressures, such as price hikes in copper and oil, signal a potential upward shift in costs.
“There is significant variability across input categories,” said Basu. “Prices for other inputs, like copper wire and cable or sand and gravel products, have escalated significantly over the past year.”
Simonson highlighted these concerns, especially around tariffs under a Trump administration.
“Costs are likely to rise much faster in 2025,” Simonson told Construction Dive. “Many other construction materials are likely to experience sudden price increases if President-elect Trump follows through on his threats to impose steep tariffs.”
This unease aligns with AGC’s Jan. 8 construction outlook survey, where a majority of contractors cited rising materials costs and tariffs as top issues for the year ahead.
Yet, despite these challenges, contractor sentiment remains optimistic, said Basu.
“The fact that overall input prices have remained flat in recent quarters is purely good news,” said Basu. “Just 20% of contractors expect their profit margins to decline over the next six months, according to ABC’s Construction Confidence Index.”
