The producer price index for inputs to new nonresidential construction rose 7.1 percent from July 2025 to July 2026 as numerous input prices accelerated to multi-year highs, according to an analysis of government data by the Associated General Contractors of America. AGC reports that the largest price increases affected petroleum products and metals that are subject to tariffs of up to 50 percent. The producer price index for diesel fuel, which reflects prices at the refinery or fuel terminal level, jumped 44.2 percent from July 2025 to last month despite declining for two months in a row. The index for liquid asphalt soared 45.2 percent year-over-year, following a 1.2 percent monthly gain in July.
Metals prices also rose steeply over the past 12 months. Prices climbed year-over-year by 40.5 percent for aluminum mill shapes, 22.5 percent for steel mill products and 18.4 percent for copper and brass mill shapes.
Several other construction materials prices increased at the fastest rate in years. For instance, the index for lumber and plywood jumped 9.9 percent, the most since March 2022. The index for paving mixtures and blocks rose 6.6 percent, a three-year high. And the index for construction plastics climbed 5.0 percent, the most since January 2023.
Wages for construction workers have also been accelerating, while overall private sector wage gains are moderating, AGC noted. The government reported on August 7 that average hourly earnings for production and nonsupervisory employees, a category that covers most craft workers and office workers who aren't supervisors, rose 5.2 percent from July 2025 to July 2026, the largest year-over-year increase since January 2024. The same measure for the entire private sector rose 3.2 percent, the least in more than five years.
AGC noted that the accelerating increases in construction costs mean that more projects will be scaled back or abandoned unless tariffs are lessened or federal funding for projects such as highways and transit are increased.