Inputs declined overall in April due to falling energy prices, but steel and copper rose significantly while nonresidential costs continued their upward march.

Dive Brief:
- Construction input prices decreased 0.1% in April compared to the previous month, while nonresidential construction costs continued their upward march and rose 0.2%, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics’ Producer Price Index data.

- ABC Chief Economist Anirban Basu attributed the overall decline to falling energy prices. Gas prices fell 7.1%, while prices for unprocessed energy materials and crude petroleum were down 5.0% and 4.9%, respectively.

- That dip follows three months of increases, including unusually steep jumps in March. Overall construction input prices are 0.1% higher than a year ago, while nonresidential construction input prices are 0.2% higher.

Dive Insight:
Although cheaper energy costs drove prices down, President Donald Trump’s tariffs are still having an impact, according to Basu.

“Materials directly affected by tariffs saw sharp price increases for the month. Steel mill product prices, for instance, rose 5.9%, while copper wire and cable prices increased 5.0%,” Basu said in the release.

In the first earnings season for public construction companies since Trump announced tariffs for most countries on April 2, executives mostly downplayed their impact, though some noted that uncertainty is keeping clients on the sidelines. Tools manufacturer Stanley Black & Decker, for one, is raising its prices to mitigate tariff impacts.

Trump recently agreed to a 90-day tariff truce with China and is advancing a deal with the U.K., which has bolstered the stock market, according to Politico. Nonetheless, many tariffs remain in place for the foreseeable future, including those on certain building materials, and they are widely expected to make items more expensive and drive inflation higher in the months ahead.

“While recent developments have reduced tariff-related uncertainty, the 25% tax on steel and aluminum imports remains in place, and a sudden resumption in imports from China could cause an increase in shipping prices,” Basu said.

Indeed, Federal Reserve Chair Jerome Powell warned Thursday that the U.S. could face an increase in supply shocks, according to CBS news.

"We may be entering a period of more frequent, and potentially more persistent, supply shocks — a difficult challenge for the economy and for central banks," Powell told reporters.

Despite this, builders are staying optimistic. Just 1 in 4 contractors expect their profit margins to contract over the next six months, according to ABC’s Construction Confidence Index. Construction backlog also rose to its highest level since September 2023, per ABC.

Source: constructiondive.com