AGC: Construction Input Costs Climb as Impacts From War & Tariffs Spread

Aug. 13, 2026 — The producer price index for inputs to new nonresidential construction rose 7.1% from July 2025 to July 2026 as numerous input prices accelerated to multiyear highs, according to an analysis by the Associated General Contractors of America (AGC) of government data. Association officials called for reduced and stable tariffs for construction inputs, along with prompt enactment of a highway and transit funding bill.

“Construction firms are being hit with outsized cost increases for a host of materials and also labor,” said Ken Simonson, the association’s chief economist. “Unless there is relief from tariffs or additional funding for highway and transit projects, both private and public construction work face cutbacks.”

As before, the largest price increases affected petroleum products and metals that are subject to tariffs of up to 50%. The producer price index for diesel fuel, which reflects prices at the refinery or fuel terminal level, jumped 44.2% from July 2025 to last month despite declining for two months in a row. The index for liquid asphalt soared 45.2% year-over-year, following a 1.2% monthly gain in July.

Metals prices also rose steeply over the past 12 months. Prices climbed year-over-year by 40.5% for aluminum mill shapes, 22.5% for steel mill products and 18.4 % 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%, the most since March 2022. The index for paving mixtures and blocks rose 6.6 %, a three-year high. And the index for construction plastics climbed 5.0%, the most since January 2023.

Wages for construction workers have also been accelerating, while overall private sector wage gains are moderating, Simonson 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% 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%, the least in more than five years.

AGC officials 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. They added that greater certainty regarding trade policy, along with enactment of a long-term federal surface transportation bill, would enable contractors to estimate project costs more accurately, bid work with greater confidence, invest in workers and equipment, and keep projects moving efficiently.

“Price relief and additional funding are both essential for contractors, project owners, investors and governments,” said Jeffrey D. Shoaf, CEO of AGC. “Providing lower rates and greater certainty on trade policy while enacting a long-term surface transportation bill would help contractors bid work with greater confidence, invest in their businesses and workforce, and ensure critical infrastructure projects continue moving forward.”

View producer price index data.