The Daily Dig
Construction input prices climbed 1.7% in April compared to March, with nonresidential inputs up 1.8% for the month, according to an Associated Builders and Contractors analysis of U.S. Bureau of Labor Statistics Producer Price Index data released May 13.
The year-over-year picture is stark. Overall construction input prices are 7.0% above where they were twelve months ago, and nonresidential inputs are up 7.4%. ABC Chief Economist Anirban Basu put the pace in sharper context: input prices have risen 6.2% in just the first four months of 2026, already outpacing the cumulative 4.8% increase recorded across the prior three years combined.
Energy led April's increases. Crude petroleum jumped 11.3%, unprocessed energy materials rose 9.2%, and natural gas was up 4.9%. Basu was clear that the problem extends well beyond energy, noting escalation was widespread, with tariff-affected materials including iron and steel posting particularly large price increases.
The broader economic backdrop adds another layer of concern. Basu cited too-hot inflation data alongside upbeat labor market indicators as reasons the Federal Reserve is unlikely to cut rates this year. Contractors remain busy according to ABC's Construction Backlog Indicator, but Basu cautioned that these cost pressures will likely weigh on construction activity in the months ahead.
Snapshot:
Source: ABC Analysis of BLS Producer Price Index Data
Release Date: May 13, 2026
Overall Input Price Change (Month): +1.7% (April vs. March)
Nonresidential Input Price Change (Month): +1.8%
Overall Input Price Change (Year-over-Year): +7.0%
Nonresidential Input Price Change (Year-over-Year): +7.4%
YTD Escalation (Jan–Apr 2026): +6.2%
Prior Three-Year Escalation (for comparison): +4.8%
Crude Petroleum (Month): +11.3%
Unprocessed Energy Materials (Month): +9.2%
Natural Gas (Month): +4.9%
Materials Flagged: Iron and steel (tariff-affected)
Fed Rate Cut Outlook: Unlikely in 2026 (per ABC Chief Economist)
Construction Activity: Backlog remains strong; cost pressures expected to weigh on future activity
TheJobWalk Thoughts
When four months erases three years of prior escalation, estimating models built on recent history stop working. Any GC or sub carrying fixed-price work bid in late 2025 is exposed, particularly on steel heavy or energy intensive scopes. If escalation clauses are not already in the contract, that conversation with the owner needs to happen now.
The Fed holding rates while material costs run hot is a squeeze from both ends. Owners financing projects with debt are watching carrying costs stay elevated while their construction budgets blow out. That combination kills marginal projects. BD teams should already know which opportunities in their pipeline depend on financing coming down to pencil, because those are the ones most likely to slip or die quietly before they ever go to bid.
