By Sebastian Obando

Rising tariff levels pushed nonresidential construction input prices higher for a third consecutive month, according to the Associated General Contractors of America.

“Steep tariff increases earlier this year… drove the producer price index for construction inputs higher,” said Ken Simonson, AGC chief economist. “Even though contractors do not generally import materials directly, it is clear that domestic producers are raising prices in line with the protection tariffs are providing them.”

That’s making contractors feel the squeeze at a time when higher interest rates and market uncertainty have cooled demand for some private sector work. Nonresidential construction spending decreased again in June, the most recent month for data, for the sixth time over the past seven months.

But July’s Producer Price Index may have a more tempered impact, said Paul Giorgio, chief operating officer at Los Angeles-based Eldridge Acre Partners, which recently spun off from AECOM Capital as a separate investment real estate firm.

“Although the PPI rose 0.9% which was higher than 0.2% expectations, the impacts to the consumer and owners were not impactful as the Consumer Price Index only had an insignificant 0.2% increase and only 2.7% increase year-over-year,” Giorgio told Construction Dive. “These adjustments are in line with normal escalation and not material.”

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